Duluth, Minnesota, is a resurgent city that has garnered recent national attention for its vibrant maker districts, natural amenities, and start-ups that are revitalizing the city’s image and economy. However, the city also faces significant challenges to achieving sustained, equitable growth. As measured by population and employment, Duluth lags behind the state and many of its peer cities, including Mankato, Rochester and St. Cloud. In terms of economic growth, Duluth was also outpaced by Mankato and Rochester. Persistent economic inequality is also an ongoing struggle, with poverty concentrated within several neighborhoods, including Lincoln Park and the Hillside neighborhoods. ICIC’s report An Assessment of the Industrial Sector as a Driver of Future Growth in Duluth is to analyzes the potential for industry in Duluth to spur greater economic growth and opportunity in the city and to informs future economic development planning and actions.
- The industrial sector continues to drive significant economic growth in both Duluth and the surrounding region. In 2016, there were 9,449 industrial jobs, which supported an additional 7,353 jobs in Duluth. The industrial sector created a $3.8 billion impact on Duluth’s economy and generated $236.4 million in state and local tax revenue. An estimated $107.3 million of the tax revenue went to local government coffers.
- While on the surface there seems to be a sufficient amount of vacant industrial zoned land in Duluth to support industrial sector growth, 20 percent of vacant industrial zoned land is not developable because of low elevation. Another 21 percent includes three large brownfield sites. Much of the remaining 1,600 vacant industrial acres is challenging to redevelop due to known or suspected brownfield issues, limited parcel size, limited access, soil quality, and a host of other issues. If suitable industrial land is not readily available or is too costly to develop in the city, existing businesses that are expanding may feel forced to move out of the city. Likewise, without sufficient development-ready sites, Duluth will not be able to compete with other areas in attracting new industrial businesses to the area.
- While the rest of the economy is five times larger than the industrial sector in Duluth, on a per job basis the industrial sector supports a proportionately higher share of jobs and generates three times more local tax revenue per job. Our analysis also suggests that maintaining industrial businesses on industrial zoned land would create more jobs and drive greater economic growth than most alternative uses, including housing, green space and retail or service-sector businesses.
- Duluth has 10 strong and emerging competitive industrial clusters, which suggests that industry remains a competitive advantage for Duluth and the region and has the potential to continue to drive economic growth in the future. The clusters include Water Transportation, Aviation, and Transportation and Logistics. The majority of jobs in these clusters are accessible—requiring less than a Bachelor’s degree—and offer competitive wages. The industrial sector also supports the growth of other business sectors in Duluth, including Health Care, Education and Tourism. If the industrial sector expands, these other sectors will grow as well.
Four Priorities for Catalyzing Industrial Growth in Duluth
- Supporting and growing the industrial sector in Duluth will require coordinated economic development strategies that should recognize the importance of industry alongside other sectors of Duluth’s economy.
- Duluth is fortunate to have many industrial assets. Targeted investment in “high return” industrial assets will spur growth in both the industrial sector as well as Duluth’s overall economy.
- While clusters (groups of closely related industries co-located in a specific geography) occur organically and reflect the unique assets and competitive advantages of a region, cluster growth can be accelerated and the impact maximized through strategic interventions to address issues such as workforce development, support of entrepreneurs, or zoning.
- Finally, there is a need to develop policies that create a more supportive business environment for industry. Duluth needs to be competitive to attract, retain and expand industrial businesses. Local policies, from land use to wastewater and electricity rates, can have a significant impact on the industrial sector.
This study was commissioned by the Duluth Seaway Port Authority.
Download the full report to read the complete findings and recommendations.
Duluth’s Industrial Legacy is Also a Key to Future Equitable Growth