chapter  8
24 Pages

Over-Dependence on a Single Company or a Single Industry

Case Studies
ByGerald L. Gordon

Cities, regions, even small towns, cannot afford to become overly dependent upon a single firm — or even a single industry sector – for their sustained economic stability. A diverse industry base for a city or region is understood to mean that it can withstand the periodic growth or decline of the given dominant industry. The decline of the region's primary industry and employer ultimately meant that the local governments felt a dramatically increasing demand for transfer payments at the very time when the reductions in the local tax bases rendered them unable to provide them. Only an economy that is sufficiently diverse can withstand the rises and falls in the fortunes of a single industry or a single company. The future seemed assured for the good people of Chillicothe, Missouri until 2011 when the Chillicothe plant succumbed to the substantially lower wage rates the company could find in Mexico.