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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