Transforming the Midwest from Rust Belt to Tech Belt
What has been known as the Rust Belt—a symbolic name for the rusting out of idled steel mills and auto factories—is now shedding its rust and developing the shine of a Tech Belt. This former pinnacle of the U.S. economy is making a comeback, which bodes well not just for our country’s heartland but for our economy and morale nationwide.
It’s in sync with President Joe Biden’s vow to “Build Back Better”: to create millions of jobs, invest more in research and development and emerging technologies, and upgrade worker skills across a broad swath of America. This renewal promises to rebalance the money and power that shifted to Silicon Valley—and to China.
The Silicon Valley elite may have ridiculed the Midwest as “flyover country,” but the heartland has begun the road to recovery. The erosion of manufacturing work over the past decades can’t be replaced by minimum-wage jobs. Many inner cities and rural towns in Middle America continue to struggle with population decline, poverty, opioid addiction, weak or no broadband, poor social services, crumbling infrastructure, and a diminishing tax base. Trashed eyesores remain.
Despite these very real obstacles, the revitalization of bygone industrial regions built on coal, iron ore, and oil by legends named Carnegie, Mellon, Rockefeller, and Frick is underway. Now, with more investment in startups, technologies, workforce retraining, infrastructure rebuilding, and R&D, the economic woes underlying mid-American gloom are being reversed and helping us maintain our global innovative edge.
The “flyover country” stereotype has existed for years. The Midwest has been seen as the home of manufacturing and mining dinosaurs. Of boring plodders. But these perceptions are outdated. Driving my Honda Element SUV, I started a grassroots reporting journey in the summer of 2020. It was a hands-on way of learning about the current state of the country. It was also a significant personal trip. Since graduating from Ohio University, I hadn’t been back much. There had been little reason to go home, other than for holidays and funerals.
Home is the town of Lancaster in Fairfield County, just north of the Appalachian foothills. It was a good place to start and a great centralized base for traveling throughout the heartland, from the hollows of West Virginia to the rivers Allegheny, Monongahela, and Scioto; to the factory towns of Pittsburgh and Youngstown; to the motor cities of Detroit and Flint; to Hoosier country and the bluegrass of Kentucky. Google Maps on my smartphone was an able navigator.
It was a trip down memory lane: I revisited the places of my childhood and the original homestead of my father’s family on Kentucky’s Zion Ridge, where there is still no running water and few paved roads, but a tobacco barn, a pond, cows, and mountain scenery. It was moving.
But I also brought my reporter’s eye. As I explored these rustic spots decimated by industrial decline, I knew that innovation springs from necessity, from the worst of circumstances. And my onsite reporting of emerging economies throughout Asia helped me to recognize a developing region, this time in the American heartland. I put eight thousand miles on my Honda Element, driving on winding country roads past cornfields and pastures, and on flat interstate highways with billboards and mileage posts signaling my next destination. It’s good that gasoline was cheap then.
Right here in Middle America, I discovered a reenergized economy built on optimism, innovation, sheer grit, and a strong work ethic. Throughout remote zip codes of Ohio, Michigan, Indiana, and Pennsylvania, I found aging, one-industry towns beginning to diversify. In previously forlorn places I discovered technologically advanced upstarts in biotech, 3D printing, self-driving cars, green energy, artificial intelligence, and robotics. I found all-American, higher-skilled (and higher-paying) jobs in a number of metro areas. I saw Zoom towns of remote worker bees that had popped up in Appalachia. It was a trend that wouldn’t have seemed obvious except that I took the time to explore, not just drive by on the freeway.
On my road trips, I interviewed countless innovators who are digging out from the shutdown of auto- and steelmakers, mines, and chemical plants. There was space robotics technology in Pittsburgh searching for water on the moon; brain stimulation research in West Virginia seeking to cure Alzheimer’s disease; and from Athens, Ohio, ultracold storage techniques for distributing vaccines to fight COVID.
Without fanfare, a pivotal movement has been growing to restore the American dream in towns like Lancaster and cities like one-time industrial center Dayton, home to the Wright brothers and their flying machine. Tech ecosystems—entrepreneurial talent, accelerators, incubators, universities, and scientific breakthroughs—are retooling midsized heartland cities and Appalachian towns. Remote regions that were nearly forgotten when the money and power shifted to Silicon Valley—and to China—are being rebooted. Who doesn’t want to be part of a reemerging American frontier that’s bringing back jobs, raising incomes, and helping us beat back China?
It’s true that the Midwest doesn’t yet boast a high-profile tech company like Apple or Tesla or Zoom (though Intel is investing $20 billion in a new semiconductor plant in central Ohio). Nor does it have a venture capital player in the league of Sequoia Capital or Accel or Andreessen Horowitz. But Pittsburgh, Youngstown, Cleveland, Detroit, and other cities that defined yesterday’s industrial revolution are evolving as high-tech centers. Over the past decade, venture capital investment has quadrupled and 18,000 startups have formed in the region. Tech talent is moving in from the coasts, and Columbus and Indianapolis are seeing a population boom.
Prominent Silicon Valley leaders such as Salesforce and Oracle are swooping in to acquire cutting-edge companies in the Midwest. Tech icons like Cisco’s John Chambers and Brad Smith, previously with Intuit, are creating entrepreneurial sparks in Appalachia with philanthropic and funding efforts to revitalize the poverty-stricken state. The venture firm Drive Capital, launched in Columbus by two former Sequoia Capital partners from the Bay Area, is bringing Silicon Valley-style investing to Middle America and has already backed more than sixty startups region-wide, with several wins, including language-learning app Duolingo.
As Drive Capital’s cofounder Mark Kvamme told me over lunch in the hip Short North district of Columbus, “You don’t have to be in Silicon Valley to build a great technology company.”
With so much at stake in revitalizing the Rust Belt and bringing back jobs, it’s no wonder that big names in business and politics like Steve Case and Michael Bloomberg are putting time, energy, and money into a turnaround and an untapped entrepreneurial well.
Several midwestern tech hubs are at the starting gate to be the next Silicon Valley, following the evolution of Silicon Beach in Los Angeles, Silicon Hills in Austin, and Silicon Alley in New York City, but each developing its own distinct identity. It’s not about creating the next Pokémon Go or NFT. It’s about practical technology applications in healthcare, finance, education, and transportation. Unlike fads that flamed out, mid-American tech is grounded in robotics, artificial intelligence, software services, green energy, 3D printing, and biotech.
As the real estate saying goes, it’s all about location, but it’s also about proximity to resources. Sand Hill Road, the nation’s venture capital nucleus, sprang up right next to Stanford University. TusPark, Beijing’s tech and venture hub, developed just outside the gates of Tsinghua University. Likewise, hubs in the Midwest leverage nearby talent, R&D, and intellectual capital. There’s a tech buzz around such strongholds as the University of Michigan in Ann Arbor, the healthtech corridor around the world-renowned Cleveland Clinic, the 3D printing campus of the Youngstown Business Incubator, and Nationwide Insurance and Ohio State University in Columbus.
Pittsburgh’s so-called Silicon Strip was once mainly warehouses. Today, it sports a newly built, four-story space for virtual reality labs creating avatars at Facebook (now Meta). Pittsburgh’s remarkable high-tech climb from its Steel Town roots stems from engineering-strong Carnegie Mellon University. As former Pittsburgh mayor Bill Peduto has said, the city “still shows its scars from the past, but from fossil fuels and robotics, artificial intelligence, and biotech, we are building it better.”
Of course, the Rust Belt’s transformation hasn’t reached everywhere. In some devastated, off-the-grid areas, change is glacial and largely anecdotal. Inexperience, lower expectations, capital shortages, and few advancement opportunities stand in the way. Newly empowered startups may fall short of replacing work lost due to deindustrialization. Marginalized people may not make it into the much-heralded middle class. But this push forward could narrow the stark economic divide between elite coastal states, with their gated communities, swimming pools, and Tesla cars, and the old Rust Belt, with its rusted-out factories; dilapidated trailer homes; and front yards full of junk.
The collapse of steel mills, chemical plants, and coal mines over the past fifty years devastated
the region. And those blue-collar jobs aren’t coming back. Automation, robotics, artificial intelligence, and offshoring production to China have seen to that.
But a new, innovative mindset has emerged, along with a new industrial policy to invest in America and compete with China. As John Chambers, the former CEO of Cisco Systems, put it, “When the factories and mines closed, our drive, dreams, and curiosity were lost. Now we need to dream again, and to achieve those dreams we need to become a startup country.” His deeply ingrained lesson? “We need to stay ahead of market transitions, to disrupt or be disrupted.”
Rebecca A. Fannin is a journalist, media founder, and author of four books including Silicon Dragon (2008), Startup Asia (2011), Tech Titans of China (2019), and her latest, Silicon Heartland (2023).
Rebecca A. Fannin will be speaking at the Worth Cities Summit 2023 taking place on June 8th in Charleston, SC. Come to see Fannin speak live, in person by registering here.