The city of Temple, Texas, is strategically located along the Interstate 35 corridor between Austin and the Dallas/Fort Worth Metroplex. In addition, it is adjacent to Fort Hood, one of the largest active duty armored posts in the US. In 2011 the Killeen-Temple-Fort Hood MSA was ranked among top five best-performing metro areas in the nation, according to the Milken Institute, which ranks metropolitan areas by how well they are creating and sustaining jobs and economic growth.

The Temple EDC wished to position the city to continue this trend through a better targeted business recruitment program. With this in mind, TIP was hired to define the top five industry categories best suited for Temple, taking into account the community’s and region’s existing assets. Additionally TIP was to provide extensive research on each target, as well as a marketing and implementation plan.

The selection of target sectors is traditionally bound to an assessment of only a few determinant factors, such as access to an available workforce, industrial sites, and incentives. Our target industry recommendations are not based solely on these issues, but also on conversations with the area’s business leaders to better understand potential opportunities and challenges that might not be readily identifiable through secondary data sources alone.

Laborshed Analysis: Employees by Zip Code
Source: TIP Strategies

To define the study area for the target industry analysis, we established the actual laborshed of the City of Temple by collecting employee zip code information from the city’s major employers. We obtained data from 11 employers on 17,958 employees or 10% of the Temple Metropolitan Statistical Area’s (MSA) non-military workforce. Employers represented various sectors including healthcare, distribution, back office, education, and manufacturing.

Using tools such as a laborshed analysis, economic base analysis, location quotients, and a shift-share analysis, a quantitative analysis was conducted to identify potential target industry sectors. The list was then filtered further using specific criteria, including location, growth, size, image, and infrastructure. The resulting list includes both existing industry clusters and aspirational targets. Each industry sector was profiled and specific niches are noted. These niches show the greatest potential for growth, pay higher than average earnings, and are sufficiently large to warrant an investment of TEDC’s resources for business recruitment. In addition, they play to Temple’s strengths and fit with Temple’s site availability.

The TEDC adopted the plan in early 2012. With the tools provided by TIP, the TEDC has augmented its marketing program, enhanced its industry research, and re-focused its business recruitment efforts.

By: Eduardo Porter
Via: The New York Times

To hear Mike Bink, one might believe American manufacturing is about to recapture its lost glory.

Master Lock, which has made locks in Milwaukee since 1921, has brought 100 jobs back from China over the last year and a half. And Mr. Bink, who has worked at the plant for 33 years and heads the United Auto Workers local, is sure more will follow. “They are making a lot of capital investment; buying a lot of new equipment,” he said. “That will create more jobs.”

Master Lock’s story dovetails nicely with the budding upturn in manufacturing employment, which has rekindled hope across a Rust Belt pummeled by 30 years of job loss. Nationwide, factories have added 400,000 jobs in the last two years, the first sustained bout of growth since the 1990s, replacing about a fifth of the positions lost during the recession. Other companies, from Otis to General Electric, are bringing home jobs once thought lost for good.

Mr. Bink’s enthusiasm has echoed from the factory floor all the way to Washington. During his State of the Union Message, President Obama wove Master Lock’s tale of repatriated jobs into a narrative of recovery that could serve him well in November. “We have a huge opportunity, at this moment, to bring manufacturing back,” the president said. “But we have to seize it.”

Things have not looked this promising for manufacturing jobs in a long while. Rising costs in China — where the government is letting the currency gain against the dollar and wages are rising at a double-digit pace — are making it more attractive for American companies to produce at home. Expensive oil adds to the cost by pushing up the price of freight.

To do so, his administration has proposed a piñata of tax breaks and incentives intended to transform the incipient movement into a new golden age for factory jobs.

Yet a revolution in manufacturing employment seems far-fetched. Most of the factory jobs lost over the last three decades in this country are gone for good. In truth, they are not even very good jobs.

As much as the administration needs a jobs strategy, one narrowly focused on manufacturing is unlikely to deliver.

Much of the anxiety about factory jobs is based on the misconception that job losses have been due to a sclerotic manufacturing sector, unable to compete against cheap imports. Until the Great Recession clobbered the world economy, manufacturing production was actually holding its own. Real value added in manufacturing, the most precise measure of its contribution to the economy, has grown by more than two thirds since its heyday in 1979, when manufacturing employed almost 20 million Americans — eight million more than today.

American companies make a smaller share of the world’s stuff, of course. But what else could one expect? Thirty years ago China made very little of anything. Today its factory output is almost 20 percent of world production and about 15 percent of manufacturing value added.

What’s surprising is how little the United States lost in that time. American manufacturers contribute more than a fifth to global value added.

Manufacturers are shedding jobs around the industrial world. Germany lost more than a fifth of its factory jobs from 1991 to 2007, according to the United Nations Industrial Development Organization, about the same share as the United States. Japan — the manufacturing behemoth of the 1980s — lost a third.

This was partly because of China’s arrival on the world scene after it joined the World Trade Organization in 2001. Since then, China has gained nearly 40 million factory jobs. But something else happened too: companies across the developed world invested in labor-saving technology.

Consider Master Lock. Its Milwaukee plant is operating at capacity for the first time in 15 years, before it started sending work overseas. It is producing much more stuff than it did back then. But it is doing so with 412 workers — about 750 fewer than it had 15 years ago.

“They used to throw bodies at something to get the job done,” said Ron McInroy, the U.A.W.’s head for the region encompassing Milwaukee. “Now they look at the best utilization of manpower and the best utilization of machines.”

So it is across the economy. In his forthcoming book, “The New Geography of Jobs,” the University of California, Berkeley, economist Enrico Moretti points out that the average American factory worker makes $180,000 worth of goods a year, more than three times what he produced in 1978, in today’s dollars.

It may not matter to factory workers who lost their jobs. Whether forced out because an employer moved production to China or because a fancy new machine makes it easier to compete against a rival in China, the job is gone.

Still, the distinction is important. Without an understanding of the forces at work, policy makers’ attempts to bolster manufacturing could backfire.

One thing is clear. Most of the jobs lost to China and other poor countries cannot “come back.” They don’t pay anywhere near enough. And they don’t exist here anymore anyway.

The factory jobs we really want will be fewer and will require more education. But they will pay more.

Remember agriculture? In the 1960s, plant scientists at the University of California, Davis, developed an oblong tomato that ripened uniformly, and its engineers developed a machine to harvest it with one pass through the fields. By the 1970s the number of workers hired for the tomato harvest in California had fallen by 90 percent.

In the book “Promise Unfulfilled,” Philip Martin, an economist at the university, says that in 1979 the worker advocacy group California Rural Legal Assistance sued the university for using public money on research that helped agribusiness at the expense of farm workers. And in 1980, Jimmy Carter’s agriculture secretary, Bob Bergland, declared that the government wouldn’t finance any more projects aimed at replacing “an adequate and willing work force with machines.”

It’s hard to say that workers won this battle, however. After Mr. Bergland pulled the plug, research on agricultural mechanization came to a near-halt. Yet farm work today remains probably the worst paid, most grueling job in the United States.

A tricky thing to understand is that most jobs in the United States are created in areas of the economy not exposed to global competition. They are nannies and doctors, lawyers and roofers. In a recent study, the Nobel laureate Mike Spence and Sandile Hlatshwayo of New York University found that the part of the economy that does not have foreign competitors added 27.3 million jobs from 1990 to 2008. The sector that competes in global markets added virtually none.

This doesn’t mean the administration should ignore manufacturing. We need world-class, innovative industries that compete in global markets. They won’t add a ton of jobs precisely because they must stay lean to compete. But they will pay for those jobs.

The 33,000 Apple workers in Cupertino, Calif., sustain 171,000 additional jobs in the metropolitan area, Mr. Moretti estimates.

This pattern suggests, however, that a jobs strategy should take care not to blunt the edge of our most competitive firms. If outsourcing sharpens their edge on world markets, punishing then for doing so could destroy American jobs.

More important, perhaps, manufacturing is not the nation’s only cutting-edge industry. Many of the most innovative firms are not manufacturers but service companies. Apple is very competitive. But so are the companies that design applications running on its iPhones and iPads. Hollywood studios and marketing companies are big exporters. These firms need highly trained workers and pay high wages.

Mr. Moretti says each job in an “innovation” industry, broadly understood, creates five other local jobs, about three times the number for an average job in manufacturing. Two of them are highly paid professional positions and three are low-paid jobs as waiters or clerks.

Innovation — not manufacturing —has always propelled this country’s progress. A strategy to reward manufacturers who increase their payroll in the United States may not be as effective as one to support the firms whose creations — whether physical stuff or immaterial services — can conquer world markets and pay for the jobs of the rest of us.

By: Amy Liu and Richard Shearer
Via: The New Republic

It’s game day. Kentucky’s two largest metro areas face off tonight as the University of Louisville Cardinals and the University of Kentucky Wildcats, of Lexington, go head-to-head in New Orleans in the final showdown before Monday’s NCAA championship game.

As this legendary rivalry reaches its boiling point this weekend, you won’t see a punch fly between Mayor Fischer of Louisville and Mayor Gray of Lexington. Instead, behind their playful wager and exchange of good-luck bourbon and IPA, these two mayors and their metros are acting in stark contrast to their teams’ fierce on-court competition. Louisville and Lexington are collaborating to compete economically.

Fischer and Gray are two former-businessmen-turned-mayors who took office right at the tail of the recession. Both inherently understood that rising competition abroad required them to act boldly to innovate and grow jobs at home. It didn’t take long for these two entrepreneurial mayors to look across Interstate 64 and recognize the opportunity to bring their metro areas together in ways that will put their combined region – and assets – on the global map.

Last summer, these mayors, with their high-caliber private and public sector partners, launched the Bluegrass Economic Advancement Movement (BEAM), an effort to create a metro business plan for growth that will unify and leverage their common markets assets – such as manufacturing, university innovation, transportation/logistics – to boost the economic prospects of their two metros. To demonstrate their commitment to an historic alliance, the mayors jointly appointed Jim Host as chairman of BEAM, an influential statesman and Lexington businessman who chaired the Louisville Arena Authority.

Lexington, Louisville, and the surrounding counties represent a mega region of over 1.9 million people, roughly the size of Las Vegas, NV. Encompassing 22 counties, including the four southern Indiana counties in the Louisville metro, the BEAM region comprises roughly half of the commonwealth’s population, jobs, and economy. This makes the BEAM effort of vital importance not only to the economic prosperity of the two metros but the entire commonwealth.

To date, the region has been hard at work undertaking a rigorous market analysis of the strengths and opportunities facing their two metro areas and adjoining counties. The Bluegrass region boasts over 100,000 manufacturing jobs, anchored by global giants like GE, Ford, and Toyota. Both metro areas benefit from the UPS Air headquarters in Louisville, which provides an easy port of entry to the world for area firms and travelers. Both these assets may explain why both Louisville and Lexington are major exporters, besting the nation on their share of economic output generated by exports. And the presence of both University of Kentucky and University of Louisville helps the region attract talent, especially among skilled immigrants.

But the challenges are clear: Despite these assets, the Bluegrass region has been lagging the nation in economic output and productivity growth, and median household incomes have fallen faster than the national average. This is the right time for a forward-leaning vision and plan of action for making the Louisville-Lexington super region a true hub of manufacturing innovation and growth. Mayor Gray and Mayor Fisher, with their rare leadership and genuine friendship, are the right CEOs to drive this plan forward.

No matter the outcome of tonight’s game, Louisville and Lexington make a winning team.

By: Richard Florida
Via: The Atlantic Cities


Manufacturing is back, at least as a talking point.

President Barack Obama has been making an election-year case for a “built-to-last” economic strategy centered on American manufacturing. A recent Brookings Institution report argues that manufacturing is a powerful engine of exports, innovation, and high-wage jobs. In a feature story in the New York Times Magazine, Adam Davidson extols the resurgence of craft manufacturing in everything from high-tech precision parts for military helicopters and guided missiles to new herb mustards, all-natural beef jerky, and artisanal pickles. “Instead of rolling our eyes at self-conscious Brooklyn hipsters pickling everything in sight,” Davidson writes, “we might look to them as guides to the future of the American economy.”

Before we get too excited, I thought it might useful to put some actual numbers on the table. The chart below, by Michelle Hopgood of the Martin Prosperity Institute, outlines which manufacturing fields are most prevalent based on detailed data on production occupations from the Bureau of Labor Statistics. To save space, we have grouped some of these categories together and also shortened some of the occupational titles.


Manufacturing work is important. We should applaud the men and women who do it, and do our best to make it better, more engaging, and higher paying. The best manufacturing jobs today look more like knowledge jobs, involving high levels of analytical and social intelligence skill such as team building and developing others.

But manufacturing will not provide a viable economic future, at least not by itself.

For starters, pay for productions workers is below the national average. Their average pay is $33,700 per year, or $16.24 per hour. That compares to an average of $44,410 across all jobs, or $21.35 per hour.

Even more telling: some manufacturing industries pay much better than others. The 66,530 tool and die makers or the 36,200 aircraft assemblers have great jobs earning – $48,710 and $45,230, respectively. But the nearly 150,000 sewing machine operators average just $22,630 a year, or $10.88 per hour.

The number of manufacturing jobs is also falling quickly, despite the government’s best efforts. Roughly 8.2 million American workers are employed in production jobs. This does not count the 408,000 Americans who work in fishing, forestry, and farming occupations. Add them in and it brings the total to 8.6 million workers, roughly 6.5 percent of America’s total labor force of roughly 127 million. That’s down from roughly a third of the workforce in 1950. And it’s projected to decline further, to about 5 percent, by 2020.

The decline in production workers mirrors the decline of agriculture over the course of the 20th century. But it may be even swifter. A century ago, roughly 37 percent of Americans worked on farms. This declined to just slightly more than one in five workers by 1930 and 17 percent of the workforce by 1940, a period of crisis and economic resetting analogous to the current one. More than one in 10 Americans were still employed in agriculture in 1950. It was not until 1960 that the share of workers in agriculture hit 6 percent, a level similar to the share of production workers today. Since that time, the share of Americans employed in agriculture has fallen to a fraction of one percent.

Of course, the United States still produces a huge amount of food, but we do it far more efficiently and with far fewer people. Similarly, America still makes a lot of manufactured stuff, including a great deal of advanced and artisanal products, but we also do that more productively and with far fewer people. Trying to rebuild the U.S. economy around manufacturing today is the historical equivalent of trying to build the 20th century American economy around farms.

via TMASC
Opportunity grows in the region

New TMASC report in development
On November 19, 2008, Bexar County Economic Development held its inaugural Texas-Mexico Automotive SuperCluster (TMASC) Conference in San Antonio, Texas. Bexar County created TMASC that year to leverage the changing geography of automotive assembly and automotive markets in North America. TMASC would capitalize on changes in the industrial landscape by building upon the region’s numerous global vehicle and heavy equipment manufacturers, hundreds of Tier 1 original equipment suppliers, and world-class innovative assets. This first look at the region was facilitated by an excellent benchmark study conducted by TIP Strategies, Inc.

Late last year we engaged TIP Strategies to take a look at the region again and create an updated report. The finalization of that report is currently underway. Meanwhile, here’s a snapshot of the TMASC region as we saw it three years ago.

TMASC, circa 2008
Heading into 2009, the TMASC region was home to the final assembly plants of nine global manufacturers. These plants employed more than 18,000 workers and were capable of producing almost 900,000 units per year. The region also had over 200 Tier 1 supplier plants, which employed over 133,000 workers.


TMASC, circa 2011
As of the end of last year, the TMASC Region was home to seven automotive assembly plants and parts plants, employing over 17,000 workers and capable of producing over 800,000 units. The region also contained six commercial and military vehicle manufacturing plants.

Over the last few years, TMASC’s scope has broadened to reflect the region’s additional heavy equipment and commercial vehicle manufacturing activity as well. Heavy equipment manufacturers in the region include Caterpillar, John Deere, and Manitou, which together have seven plants in the region. There are also two specialty vehicle manufacturers: Skyline, which manufactures recreational vehicles, and Frazerbilt, which manufactures emergency response vehicles.


Growth hasn’t come in the form of new plants only. In 2010, Toyota invested $100 million to add a Tacoma production line at its plant in San Antonio. Moreover, yesterday GM announced its continued expansion in the region with a new $200 million metal stamping facility at their plant in Arlington. The new operation will create 180 jobs and save GM an estimated $40 million each year is logistics costs.

Regional roll out coming later this quarter
Once the new TMASC report is finalized, we will be sharing it via the TMASC website, as well as through special presentations to selected TMASC partners throughout the region. We look forward to providing an updated vision of the region to our TMASC communities and stakeholders this quarter, and to exploring new collaborations like we did last week with the Capital Area Economic Development District committee of the Capital Area Council of Governments (CAPCOG). To schedule a presentation, please contact us. We are excited about the many opportunities 2012 will give us to increase advanced manufacturing assets and activities in the region.

By: James R. Hagerty And Alistair Macdonald
Via: The Wall Street Journal

MUNCIE, Ind.—Jerry D. Bumpus Sr. was a member of the United Auto Workers union for four decades and earned as much as $28 an hour at a General Motors Co. car-parts plant before accepting a bonus to retire at age 60 five years ago.

On a recent Saturday morning, Mr. Bumpus, wearing a black jacket and clutching his résumé, was one of several thousand people lining up to apply for jobs at a new Caterpillar Inc. plant that makes train locomotives here. Those jobs start at as low as $12 an hour plus benefits, and there is no union representing the workers.

“I’m able to adapt to that,” says Mr. Bumpus, who hopes he can get the job to build up his scant retirement savings.

Things have changed in Muncie, a city of 70,000 where closures of auto-industry plants and other factories have left about one in five homes vacant. Jobless workers here and in many parts of the Rust Belt have lowered their expectations and become more flexible. At the same time, state politicians are fighting harder than ever to attract employers with lower taxes, streamlined regulation and other incentives. Companies like Caterpillar are eagerly exploiting both trends.

The politicians and workers are realizing that the battle for scarce jobs isn’t just with Asia and the Sunbelt states. It also is with neighboring states and Canadian provinces in the North American industrial heartland.

“Our challenge as a state is to stand apart from our Midwestern colleagues,” says Dan Hasler, Indiana’s commerce secretary, adding: “Our goal in Indiana is really pretty simple: It is to help companies improve profitability.”

That happens to correspond with Caterpillar’s agenda. The Peoria, Ill.-based maker of heavy equipment is adding jobs at the new plant in Muncie even as it closes an older locomotive factory in London, Ontario. At that Ontario plant, unionized workers earned about twice as much as the company pays in Muncie.

When Caterpillar announced the closure of that Ontario plant in early February, the Canadian workers were enraged. “I’ve been here 25 years and they wanted to offer us a bowl of rice to work, like we were workers in Asia,” says Rafeek Khan, a 55-year-old machinist at the plant. Other workers planted burial-style crosses, bearing their names, in the soil outside the chain-link fence Caterpillar had erected to keep them out. Caterpillar said wages at the plant were too high, making the plant uncompetitive.

The contrasting experiences of workers in Muncie and London show how the 2008-2009 recession and the painfully slow recovery of the job market since then have left North American workers with less bargaining power. The median weekly earnings of U.S. wage and salary workers, adjusted for inflation, were down 1.8% in last year’s fourth quarter from a year earlier and have been about flat over the past decade, according to the Bureau of Labor Statistics. Employers rarely cut wages, even during recessions, preventing any sudden plunge in median pay. But many new hires are willing to work for lower pay when jobs are scarce, and that is keeping a lid on wage costs.

Companies are concentrating many of their manufacturing investments in states where unions are weak and wages relatively low. Boeing Co., for instance, last year opened a nonunion airplane plant in South Carolina, supplementing its unionized factories in the Seattle area. Starting pay for assembly workers at the South Carolina plant is $14.35 per hour, compared with $15 in Seattle. But the union employees in Washington state tend to be much more experienced and average about $28 per hour. A Boeing spokesman cited regional differences in labor markets.

Where companies are expanding or modernizing unionized plants, they are winning concessions. Harley-Davidson Inc. in recent years told unions in York, Pa., Kansas City, Mo., and near Milwaukee that it would move production elsewhere unless they accepted more-flexible working arrangements, including greater use of temporary workers. The unions complied.

Tony Wilson, president of the International Association of Machinists union local in Kansas City, said workers felt little choice other than to accept Harley’s conditions. A Harley spokeswoman said the conditions were part of a transformation needed to make the motorcycle maker more competitive.

Over the past two decades, Caterpillar has been at the vanguard of corporate efforts to rein in unions. The company deployed white-collar staffers and temporary workers to operate plants during a 17-month UAW strike at eight plants in 1994 and 1995. The union eventually capitulated, making concessions in such areas as health-care benefits.

The equipment maker has gradually reduced its reliance on organized labor by opening plants in the South, where union support is scarce. At the end of 2011, about 27% of Caterpillar’s U.S. workers were represented by unions, down from 32% in 2003. As it opens new plants, Caterpillar makes no secret of its strategy. An online job advertisement posted by the company last year sought human-resources managers in Muncie experienced in “providing union-free culture and union avoidance.”

Companies like Caterpillar also are shopping for lower taxes and regulatory costs. That is where the politicians come in. All of the Rust Belt states are pursuing pro-business agendas and wooing manufacturers and other employers. But Indiana has been particularly aggressive.

Republican Gov. Mitchell Daniels, who was first elected governor in 2004, has cut costs by shrinking the state work force. That allowed the legislature last year to pass a bill that will cut Indiana’s corporate income-tax rate in stages to 6.5% in 2015 from 8.5%.

By contrast, Illinois, struggling to control pension and other costs, raised personal and corporate taxes last year—drawing a public rebuke from Caterpillar. In early February, Caterpillar sent an email to officials in Peoria County, Ill., where the company has its headquarters, telling them it had decided not to build a new construction-equipment plant there, partly because of what the company called “concerns about the business climate and overall fiscal health” of Illinois.

Caterpillar since has announced that the $200 million plant will be built near Athens, Ga. That was partly because Caterpillar wanted proximity to an Atlantic port. Even so, Illinois Republicans say Caterpillar’s decision not to consider their state for the plant shows the need for stronger efforts to reduce taxes and other costs of doing business there. “We are competing with states around us, and they are very aggressive,” State Rep. Don Moffitt, a Republican, told reporters. Illinois Gov. Pat Quinn, a Democrat, counters that he has made the state more attractive to employers, such as by enacting changes in the unemployment-insurance system. Those reforms are designed to save companies $400 million over the next seven years.


In early February, Indiana enacted right-to-work legislation that bars contracts requiring all workers to pay union fees and makes it harder for unions to organize work places. Indiana became the 23rd state with such a law, and the first in the industrial Midwest. “This announces, especially in the Rust Belt, that we are open for business here,” Republican House Speaker Brian Bosma said.

Indiana already is less unionized than its neighbors. The percentage of Indiana workers represented by unions last year was about 13%, compared with 15% in Ohio, 17% in Illinois and 18% in Michigan. The national average was about 13%. In Muncie, the UAW was a major political force in the 1960s and 1970s, representing more than 7,000 manufacturing workers in the city. For years, the union even owned and operated a public park in Muncie. Today, the UAW is barely visible there. It doesn’t represent any manufacturing workers in Muncie, though it still has a tiny branch representing deputy sheriffs.

The results of Indiana’s efforts to attract manufacturing jobs are encouraging so far. The number of Indianans employed in manufacturing at the end of 2011 was up 7.6% from two years before to 472,500, compared with a 3% rise nationally, after plunging during the recession. Over the past decade, Indiana’s performance has been better than other Rust Belt states. Its manufacturing employment is down 20%, compared with drops of 26% in Illinois, 29% in Ohio and 35% in Michigan, according to data from Moody’s Analytics.

Like many other small Midwestern cities, Muncie has suffered from an exodus of manufacturing jobs. Bitterness lingers from a 1989 strike in Muncie over cuts in health benefits at BorgWarner Inc., a maker of car transmissions. BorgWarner used managers to continue production at the plant while 2,100 workers tried to block the entrances and in some cases threw nails on the road. After seven weeks, the two sides settled the strike and agreed on a plan to reduce health-care costs. BorgWarner closed the plant in 2009 after an unsuccessful attempt to get more worker concessions.
In the past few years, Muncie has lured some new manufacturers, including Brevini U.S.A. Inc., a maker of parts for windmills. When Caterpillar announced in October 2010 that it would build locomotives in a vacant Muncie factory once owned by Westinghouse Electric Corp., the town was jubilant. Local officials put together a $28 million package of tax breaks, training grants and other incentives.

Production of locomotives began last year on a small scale, and the company is gearing up for higher output. The closure of the 62-year-old Ontario plant, Caterpillar’s main North American location for assembling locomotives, promises to bring more work to Muncie and another new plant in Brazil.

Caterpillar is seeking to hire more workers for the Muncie plant, mostly at wages of $12 to $14.50 an hour, compared with the equivalent of more than $30 an hour for most workers at the plant being closed in Ontario.

The lower wages in Muncie are fine with John Velasquez, 47, who joined CAT as a material handler in July and is now training as a welder. “I’m glad to have a job,” says Mr. Velasquez, who lost his job in housing construction during the recession.

Dustin Pittsford, 24, was among the thousands who lined up at Caterpillar’s recent job fair for potential employees. Mr. Pittsford says he currently is raising two children by working at a tire store for $8.25 per hour. The Caterpillar wages would be “a step up for me,” he says.

Muncie’s mayor, Dennis Tyler, has mixed feelings. He was a union member throughout his career as a firefighter here. And his father was a UAW member when he worked at the BorgWarner plant. “Driving down wages doesn’t do anybody any good,” the mayor says.

Even so, his top priority is jobs. Whether those jobs are unionized or not, he says, they are welcome.

London, Ontario, whose population is 366,000, also has suffered from losses of automotive-related jobs and is eager to keep as much manufacturing employment as possible. Worry began to mount last spring when Caterpillar proposed to cut wages at the London plant by about 50%. The union refused that offer, and at the end of 2011 Caterpillar said it would lock out the workers until they agreed to a new contract. The workers set up a camp outside the factory gates, burning scrap wood in old oil drums, and picketed around the clock.

During the lockout, London Mayor Joe Fontana says, he called senior Caterpillar executives frequently to ask what the government could do to help keep the jobs in London. “I’d ask, ‘Do you want new equipment, new research grants?’” he says. Caterpillar’s answer, the mayor says, was that the first step was to sort out the wage dispute.

Early on Feb. 3, Mr. Fontana took a call from a Caterpillar manager and learned that the plant was closing. “I said, ‘I can’t believe you have closed the plant when we were still talking about ways to get you back,’” the mayor says. A Caterpillar spokesman declined to comment.

Now Canadian officials at provincial and federal levels are thinking about how to make the region more competitive. They note that Canadian corporate taxes are lower than those in the U.S. One big problem, though, is that a stronger Canadian dollar has made the nation’s exports less competitive.

Finding new ways to attract employers “is something that we are very diligently engaged with,” says Brad Duguid, Ontario’s minister of economic development and innovation. “One of our challenges will be competing with low-paid jurisdictions around the world.” By some measures, that now includes Indiana.