Industry

Previous federal administrations managed to balance the American budget deficit, create jobs, and increase exports while maintaining reasonable taxation and a strong dollar. The current administration has done quite the opposite by reducing taxes to benefit the rich and cutting social welfare programs, which created social inequality that, hurt the poor directly. Unemployment has soared, and the deficit is at a staggering 8-10 trillion dollars. www.debtclock.com

The National Debt has continued to increase an average of $2.28 billion per day since September 30, 2005, and the war in Iraq has increased the burden on the American economy, which is stagnating and has been plagued by a weakened dollar. The weak dollar has not encouraged or stimulated additional exports. Indeed, more imports and more borrowing have occurred to contribute to the budget deficit.

According to Dolbeare, K. M., & Hubbell, J. K. (1996:62), an out of control federal budget, with looming deficits likely to add to the current trillions of national debt and accelerating to dangerous levels every year, poses a major threat to economic viability and political stability.

The downward slide of the American dollar against the yen and the euro suggests that foreign investors have begun to worry about America’s economy, which explains the stagnation of American industry and the creation of new jobs, which is a synonym for growth and economic expansion. These factors reflect on the industrial situation in Dover, where 158 companies are struggling to maintain their competitive position, such as Playtex. Kraft Foods, a major industry in Kent County, also is struggling to keep its manufacturing plant in Dover.

Dover, because it is a small city, does not have a strong industrial base, compared to Wilmington in the north, with its huge DuPont industries. Construction is probably the most significant industry in Dover, with few major players. The Dover area is surrounded by some 158 companies, of which Kraft Foods is the largest.
“A change in industry structure offers exceptional opportunities, highly visible and quite predictable to outsiders. But the insiders perceive these same changes primarily as threats. The outsiders who innovate can thus become a major factor in an important industry or area quite fast, and at relatively low risk,” observed Drucker, P. F. (1985:73). Dover, therefore, will benefit from adding new industry or industries.

Dover is experiencing the effect of resistance to change or the inability to transform the local economy and industry into swinging actions such as diversification, which is one of the reasons why companies are downsizing or going out of business, including the service and retail industries, not only manufacturing. These industries, such as Playtex, Sunroc, and Kraft Foods, definitely are not ready to look into more opportunities, let alone adapting to new market challenges. Also, noted Dolbeare et al. (1996:89), jobs of this kind have been lost in recent years because manufacturing has relocated to low wage areas of the world and the advent of new technologies have permitted increased production with fewer employees.

The American economy is in crisis, and so is the smaller economy in Dover and its state, Delaware. Indeed, the economy is transforming itself from one in which the worker produces goods to one in which the worker produces services, observed Castells, M. (1980:164), because the majority of goods are manufactured in China and the rest of the developing countries.

Some of the news, however, cannot escape reality, for example, when MBNA, a major credit card and finance company laid off employees, some by severance payment or retirement offers. The number of employees is unclear, but it is estimated at over the 1,000 target set by MBNA, where the first reduction took place in the company 23 years ago. The redundancies have affected residents and sent shock waves across other sectors of other industries, according to The News Journal, April 7, 2005.

On April 20, 2005, the Dover Post also brought the bad news of “Dover Sunroc plant to shut down permanently June 30.” The company, that manufactures bottled water coolers, closed due to stiff competition and economic pressures from overseas as well as the weakened dollar.
In another article, on 14 September 2005, the same newspaper quoted Ed Ratledge, a University of Delaware professor at The Center for Applied Demography and Survey Research, saying, “By 2030, Kent County (Dover) could see an increase from around 140,000 people to 180,000, resulting in more people looking for jobs. But Delaware has been hit hard lately with the recent loss of Sunroc and jobs at MBNA, Playtex Products, Inc., and improving technology often means the end of manufacturing jobs.”
Previously, on 20th July 2005, it has been reported that one-fifth of the staff members at the State’s economic development agency were made redundant. The agency, organized under the State’s Executive Department, employs 45 persons, noted the Dover Post.

On May 11, 2005, the Dover Post reported that the city manager, Tony DePrima, had to increase the rates and fees in waste collection, water, electricity and sewage due to rises in fuel and health care costs and loss of jobs. The new budget reflects city council’s desire to keep down costs yet increase funding in public safety and public services.

Industry concentration is located in the northern part of the state, and Dover’s economy at this time is primarily a service sector, based on insurance and finance as well as political administration and state government civil servants.
There is no central location for handling data of economic development nature and the present information might not be 100% accurate and the margin of error could be higher as significant number of the jobless does not qualify for benefits. The Delaware Economic Development Office (DEDO) participate in funded training to boost and tackle unemployment and minoritities condition.

According to the Center for Applied Demography and Survey Research at the University of Delaware, 85% of all the jobs lost in manufacturing are lost forever to technology. Our survey indicated job distribution as following:

Ratio 5000/50.000, 1 in 10 works on the Dover Air Force Base (DAFB), plus civilians, bringing the ratio to 2/10 of the population. Other industries depend on the Base, making it almost 3-4 of the population who depend on the military for their jobs.
Government and utilities absorb 2-3 of 10 people in full employment.
The remainder of the employed are shared between the manufacturing and service industries, according to the Dover census analysis.
The government sector, including education, is one of the highest concentrations of employers and absorbs a big chunk of the budget.
The rest goes to medical, clerical and hospitality and catering.
In the Dover area, there are 70 major companies of the total of 158 in Kent County that represent major employers and manufacturers; 68 companies employ a total of 2309 employees, representing 66% ± 1 of the total analyzed. After the closure of Sunroc, with its 400 employees, and Playtex, with its 800 employees, a total of 1200 employees and workers, representing 34% ± 1 of the actual total workforce, were lost. This trend of decline in the industry sector is a dangerous one that could not be prevented during the current economic situation. Thus, Dover lost 1/3 of its workforce in less than a 5 year period.

The analysis did not include the total number of employees in Kent County of the 158 companies, and in some cases, such as family businesses, small operations, and sub-contracting and outsourcing, the number of employees was unavailable. Because revenues are still considered a sensitive issue, not enough information could be used in the analysis. Most are one-owner/operator type operations without employees but still qualified as one of the Kent County manufacturers in the data. http://www.census.gov/csd/susb/susb02.htm

The primary reason for the decline in the industry sector in Dover is the lack of a strategy for these companies and a focus on operational effectiveness rather strategies that can help them to move forward, as suggested by Dr. Porter, M. E. (1998:39) from Harvard University. For almost two decades, managers have been learning to play by a new set of rules. Companies must be flexible to respond rapidly to competitive and market changes. They must benchmark continuously to achieve best practice. They must outsource aggressively to gain efficiencies. And they must nurture a few core competencies in the race to stay ahead of rivals.

The importance of producing a major industrial player created a sense of uncertainty in the city, which promoted the city and county authorities to look for consultants who are able to produce plans for the next 10 years without that industrial major player because they have failed to attract such an investor (Dover Post, November 2, 2005). However, some supermarkets have created their own distribution centers, becoming de facto the major players and employers.

At first glance there is no cohesive strategy to stop companies and the industrial sector from falling victims to market forces. Attention should be directed to the need for a marketing strategy and marketing plan to save existing businesses and industry before looking for new investors and new opportunities. The essence is to save existing businesses before they collapse. This approach is shared by many and demonstrated through survey.

According to www.newzap.com/dover/, the plans for a technology park have been abandoned in favor of an urban development and a golf course, which is a big mistake, because the city of Dover needs to attract businesses that create and sustain employment. Moreover, they add to the main stream of its revenue through taxation. The city is still uncertain of its revenue stream because it does not have stable income and the budget is always on the increase. It relies on existing residential services and taxes as there are no significant corporate taxes. The bureaucracy does not tap into long-term projects that could bring long-term prosperity and tax revenues. Because Dover is a small town, competition always kills existing business, and then another comes to replace it with almost the same sort of products and activity.

The city needs to bring in light industry from outside the state or foreign investors as a mean of economic regeneration, as cited by Porter, M. E. (1998:241), who indicates that “In a national or global economy, cluster development can be greatly accelerated by attracting cluster participants from other states or nations. A growing cluster begins to attract in-bound foreign direct investment (FDI) in the form of manufacturing or service operations and supplier facilities.”

One of these activities is to create a free zone, such as the one at the port of Wilmington, where products can be brought in from abroad to be assembled, tested, and sold again abroad, but Dover does not have the necessary infrastructure. Indeed, it lacks an international airport and has only a military base, which cannot be used for such development. The political quagmire and the lack of strategic technocracy make it difficult to create strategic projects due to cost factors. One example of such difficulties is the Civic Centre, which could attract different sports in different leagues, plus important and large events, but cannot seem to get proper backing.

Dover needs urgently:
With the early stage of Tech Park, which had the potential to bring additional tax revenues to the city and the lack of strategic approaches to solve economic regeneration, growth and expansion, Dover is at a serious disadvantage. In addition, companies going bankrupt, downsizing, or moving out of state for lack of an adequate transportation system have also hurt the economy. The survey and the comments of interviewees emphasized the need for the following:

A business park that would bring light industry with minimal pollution such as those in California’s Silicon Valley and those associated with space technologies, similar to Playtex Company.
A fair-size filming studio industry, equivalent to the one in Ontario, Canada, following the success of “Meet the Parents” and its sequel “Meet the Fockers,” because the lead actress is a Dover native but primarily to take advantage of the state’s favorable business conditions. Currently, the DEDO (Delaware Economic Development Office) is trying to attract the film industry, at least in the northern part of the state and not in the southern part, where Dover is situated.
Use the state’s low taxation as a business-friendly incentive to attract solid businesses, as Dover offer low costs, lower taxation, skilled labor, and incorporation friendly incentives.
Create a solid and large organization for private-public partnership investment and project finance.
Introduce the dependable industries concept.
Encourage R&D companies to relocate to Dover.
Highlight skills available through academic institutions, (Delaware has the second highest concentration of Ph.D.s in the United States).

Kraft Plant in Dover, Delaware