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January 5, 2009 

 Q&A: Ex-Chicago Tribune, ‘Caught in the Middle’ Writer Richard Longworth 1/5/2009
The mission of Going Global, which appears on MidwestBusiness.com on most Tuesdays, is to educate and inform Midwest technology companies on what local technology companies are doing internationally so other firms can learn from the successes of like-minded peers.

CHICAGO – Richard Longworth is the author of “Caught in the Middle,” the former lead foreign correspondent for the Chicago Tribune and is now a fellow at the Chicago Council on Global Affairs. Click here to hear the interview that appears below.

Michael Muth: You liken the Midwest 100 years ago with the Silicon Valley today. How so?
Richard Longworth: We were the backyard tinkerers and the guys in garages who came up with new ideas 150 years ago. Our problem is we built big companies and we’ve lived on them ever since. Other areas of the country took that over.

MM: What’s the role of the broadband IT pipe as the world’s largest Internet switching point here in Chicago?
RL: In the global economy, communications and connectivity are everything. The transmission point is huge advantage for Chicago.

One thing follows on another. Telephone lines were laid along railroad lines. Internet connections follow telephone lines. One technology leads to another. Schools should benefit (especially universities). That has been one argument for wiring Chicago. All kids could have access.

MM commentary: Other than benefits to the carriers, I’m not convinced of the benefit.

MM: What’s the best way to digitally connect the rural Midwest: cable, DSL or satellite?
RL: There are a couple organizations in Illinois that are trying to get fiber-optic access for the rest of the state. Rural areas have 35 percent less access than urban areas, which does make a difference. You’re already at considerable disadvantage in a rural area.

MM: Why is biomass a better solution to help our economy than ethanol?
RL: At a maximum, corn-based ethanol will substitute for 13 percent to 15 percent of our energy use. Simply making ethanol uses up a lot of energy on its own. The price of corn and land is going up. This is leading to a worldwide food crisis.

When the bubble pops, we might have lost export markets. Biomass is anything that burns (i.e. grass, stalks, waste, etc.). That could replace our dependence on fossil-based fuels. While we can get to it, we still can’t do it economically.

MM: How can the Midwest leverage water in the Great Lakes to its advantage?
RL: We’re waking up to the fact that we have 20 percent of the world’s fresh-water supply. They’re drying up in the South and West. The federal government could say we will implement a big straw to Las Vegas and Phoenix.

The Midwest determines what happens with the Great Lakes watershed in a compact with Canada. We have to ratify it, but only four states have so far. Until it’s ratified by the other states, it has no force of law and we’re still vulnerable. The costs are prohibitive, but it could happen.

MM commentary: We should be leaders in freshwater technologies. I don’t see that we are.

MM: Where does nanotech fit in the history and future of the Midwest?
RL: It’s growing somewhat in the Midwest. We haven’t done as well as other parts of the country. We know materials here in the Midwest.

I was in Dayton, Ohio. Delphi is based there and is closing up. They’ve worked in materials their whole lives. They want to build on this to create a nanotech industry. The tire companies in Akron, Ohio aren’t making tires any more. They’re making polymers.

MM: NAFTA is mentioned as the reason for the Midwest’s downfall. If that’s the case, why don’t we seem to have many more Canadian products and services sold here?
RL: NAFTA gets a lot of the blame for one old treaty. What people were saying is that globalization has tossed the Midwest up in the air. Globalization is too big to get your arms and head around. NAFTA was shorthand for everything that’s going on.

MM commentary: With NAFTA, the issue is Mexico rather than Canada.

MM: What’s the Kalamazoo promise? Why aren’t more cities making such promises?
RL: Kalamazoo, Mich. had a lot of drug and pharmaceutical companies move out. Still, they retained a few wealthy families who are committed to the city (such as the Streiker family). They announced that any kid who graduates from a Kalamazoo high school will get a four-year free ride to a public university in Michigan.

People started moving back in. They needed a place to live and there was a building boom. Stores opened up to serve them. Newton, Iowa just lost Maytag and they’re looking at it. The Quad Cites are considering it, too.

MM commentary: I question whether these are sustainable.

MM: How did Warsaw, Ind. develop such a strong medical device cluster? Why aren’t we emulating that more?
RL: These things just happen. Dupuis came down from Michigan 100 years ago. He built splints from all the abundant wood there. That grew into Dupuis being the first big company in the industry. His best salesman (Zimmer) started his own company. Another spun off.

They didn’t sit down and decide. It just happened. They have one resource in Cedar Falls, Minn.: snow. It’s the snowmobile capital of the world. Artic Cat spun off a couple other firms like Snow Cat. Clusters are wonderful things, but you can’t plan them.

MM: If American companies no longer have international departments, how do we learn to sell to the rest of the world?
RL: These days, all operations that can be outsourced are (sales, accounting, etc.). They do need central services and people who know global law, accounting, etc. Chicago is well positioned for that. You handle sales in China out of China rather than Chicago.

MM commentary: There still needs to be some central control to maintain brand consistency across borders.

MM: How would a Midwest think tank integrate local with global interests?
RL: We’re feeling the effects of globalization from Ohio to Iowa, but we’re not talking with each other.

A Midwest think tank could be a table where people could come together. Why not create a central forum as a place where people can work together on these problems to encourage universities and cities facing the same future?

MM commentary: The focus should be on practical solutions rather than egghead theories.

MM: How can the MRUN (Midwest Research University Network) help the Midwest become more global?
RL: It’s brand new and still very small. Allen Dines is involved in technology transfer at the University of Wisconsin-Madison and runs it on a shoestring.

It’s bringing together a regional network to show off ideas to VCs instead of each of them seeking out individual VCs. It’s an example of what we ought to be doing in cooperating across state lines. He’s asking the right questions.

MM: How is the U.S. Midwest different from the U.S. Southeast or out West?
RL: To a degree, they aren’t different. What happens historically happens in the Midwest first. The depression began in the Midwest.

We saw the rebirth of American industry first after World War II. The shrinking of the middle class is creating an hourglass economy with lots of people moving to the top and bottom. You don’t see it in the South or West. The jobs are more evenly distributed.

MM: How is it different from rural Europe, Asia and Latin America?
RL: It absolutely is a rural versus urban thing. The global era is a metropolitan era. It’s not just in the U.S. It’s happening all over the world. They have more of a safety net in Europe. Cities are growing and rural areas are emptying out.

MM commentary: The Midwest is not alone in being caught in the middle. Many other rural areas are as well.

Michael Muth is managing director of GATA, an international business development consultancy that helps technology companies build international partnerships. He can be reached at muth@midwestbusiness.com.
Click here for Muth’s full biography.

Previous Columns in 2007:
Q&A: Midwest Regional Director Michael E. Howard of Export-Import Bank (6/17/2008)
Q&A: Intetics Managing Partner Alex Golod on Belarusian Economy (4/15/2008)
Q&A: Intetics Managing Partner Alex Golod on Protecting Intellectual Property (4/9/2008)
Q&A: Intetics Partner Alex Golod on Being a Jack of All Trades (3/31/2008)
Q&A: Motorola WiMAX Director Tom Mitoraj on Unstoppable Freight Train (11/26/2007)
Q&A: Motorola WiMAX Director Tom Mitoraj on Global WiMAX Differences (11/20/2007)
Q&A: Motorola WiMAX Director Tom Mitoraj on Widespread WiMAX Growth (11/12/2007)
Q&A: InterPro Translation CEO Ralph Strozza on Translation Tools, Costs (9/18/2007)
Q&A: InterPro Translation CEO Ralph Strozza on Globalization, Translation (9/11/2007)
Q&A: InterPro Translation CEO Ralph Strozza on Intercultural Translation Issues (8/7/2007)
Q&A: Madison Capital Partners CEO Larry W. Gies on Specific Country Issues (7/10/2007)
Q&A: Madison Capital Partners CEO Larry W. Gies Jr. on Cultural Differences (6/26/2007)
Q&A: Madison Capital Partners CEO Larry Gies on International Private Equity (6/11/2007)
Q&A: Scott H. Lang of S.H. Lang & Co. in Chicago on Foreign Deal Making (5/15/2007)
Q&A: Scott H. Lang of S.H. Lang & Co. in Chicago on Middle-Market M&A (5/8/2007)
Q&A: Scott H. Lang of S.H. Lang & Co. in Chicago on Middle-Market Firms (4/24/2007)
Q&A: George Filley of NAVTEQ in Chicago on Data Localization, Reach (3/27/2007)
Q&A: George Filley of NAVTEQ in Chicago on Partners, Personal Privacy (3/20/2007)
Q&A: George Filley of NAVTEQ in Chicago on Digital Mapping (3/7/2007)
Click for 2006 column archive.
Click for 2005 column archive.
Click for 2004 column archive.

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