City left in the cold as refrigerator factory closes

Tribune senior correspondent

Here's a recipe for life in the de-industrialized Midwest:

Take one factory.

Scrap the heavy equipment

Decontaminate the waste.

Expose the thick beams and brickwork.

Toss up some drywall, run a few pipes and connect the track lighting.

Throw down a little carpeting or refinish the wooden planks.

The Midwest manufacturing belt is going condo, and America's heartland will never be the same.

Its communities were built to last on the strength of big-shouldered employers. But the free flow of capital across borders, the absence of restraints from government and the triumph of cost-cutting above competing considerations has cleared the way for an outmigration of blue-collar jobs.

This week, the Chicago Tribune concludes a series of stories about the region's vanishing smokestacks with a look at a small town facing a big blow as a result of low-cost competition abroad. The good news: Condo sales are going strong.


When Mayor Lloyd Walker got the news that this city of 8,000 would lose its 2,700-employee refrigerator plant to Mexico, he figured that other Rust Belt communities facing the same sort of economic disaster would know just what to do.

So he went looking for examples of Midwest cities that had turned back the forces of globalization and kept their industrial base intact.

"I couldn't find one," Walker said. "I don't know what works."

Easy answers? Not here. The citizens of Greenville are facing the fight of their lives, and they have plenty of company.

The nation's industrial heartland appears to be sinking fast, leaving behind no tried-and-true formula for replacing thousands of good-paying jobs that disappear overseas or through restructuring.

With global economic forces sweeping away long-standing employers, no one can confidently depend on a single plant to sustain a community.

"It's a movement you can't stop," Walker observed.

In recent weeks, the Chicago Tribune has profiled Detroit, Rockford and Milwaukee as these Midwest manufacturing icons struggle to transform their economies under relentless pressure.

A quarter-century after the dark early days of the Rust Belt bust, some lessons have become apparent: Throwing money at trophy projects doesn't work. Local leadership is essential for restoring hope and opportunity. Trying a new approach can be well worth the risk.

To compete, the experts agree, every community needs to make the most of its particular advantages, such as proximity to a growing metropolis, inexpensive housing, scenic vistas, or a capable workforce.

"A lot of communities either try to prop up their long-established economic pillars or, failing that, they try to attract something big and new. Neither is a winning strategy," explained Sean Safford of the University of Chicago Graduate School of Business. "You have to look at what's already there and what can be done to transform it."

In a nation that has opted for dynamism over stability, and economic change over holding on to the past, the winners in this unforgiving game may still lose ground. But they stand to lose a lot less than those closing their eyes to a post-industrial future.

"We don't have an isolated case here," said Grant Hole, a Greenville real estate developer. "Obviously, the work is leaving. We need to give new companies a reason why they should come."

For now, Greenville's most conspicuous feature remains the hulking Electrolux AB refrigerator plant, a fixture since it started producing wooden ice chests a century ago under entrepreneur Frank Gibson.

Generations of residents have made a good living behind its imposing beige walls, and everyone in town, it seems, has friends or relatives who make the Frigidaires, Kenmores and Kelvinators found in kitchens across America.

The work pays about $15 an hour, plus generous benefits. The new Electrolux plant just across the Texas border in Juarez, Mexico, will pay a reported $1.57, plus bus fare and lunch.

The shutdown has been a long time coming. In October 2003, Electrolux Chief Executive Hans Straberg first floated the idea to appease investors concerned about what was considered an underperforming plant. A $100 million renovation just a few years earlier had failed to pay dividends as competition increasingly shifted to low-cost sites abroad.

Local and state officials launched a massive effort to save the plant. The United Auto Workers agreed to deep cuts in wages and benefits. The city and state promised to waive taxes for the next 20 years. Michigan Gov. Jennifer Granholm got involved, and an incentive-filled proposal evolved for replacing the antiquated facility with a new factory on free land that would require 800 fewer employees.

Mayor Walker met Straberg at Logan International Airport in Boston to pitch the salvage plan, telling him the savings would amount to as much as $74.3 million each year. Electrolux questioned those figures. And its own calculations suggested a move to Mexico would save a reported $81 million, primarily in labor costs.

In January 2004 the company decided to proceed with the plant closing.

"We were facing a competitive disadvantage," said Electrolux spokesman Tony Evans. "All things considered, we couldn't close the gap."

The tax giveaways probably would have failed anyway, says economist Barry Bluestone of Northeastern University, whose books include "Deindustrialization of America: Plant Closings, Community Abandonment and the Dismantling of Basic Industry."

"When a firm chooses to leave, trying to keep them by essentially subsidizing the labor force is not going to work," Bluestone said. "You couldn't subsidize them enough. There isn't some pill you can take."

Even those who once fought for a national industrial policy to keep factories intact now concede that rapid change is a fact of life. "Let's be realistic," says Robert Reich, former labor secretary in the Clinton administration. "When you slow down the movement of capital, you create inefficiencies. The whole economy becomes less dynamic."

In Greenville, the first layoff of 847 employees came Sept. 2. The next 839 are slated to lose their jobs on Friday. Unless something changes, the doors will shut on the final 1,000 workers by the end of March.

The impact on the community promises to build in the months ahead.

A fortune in payroll and an estimated 25 percent of city property-tax revenue will be lost immediately, along with hundreds of jobs at local suppliers. But at least each Electrolux worker will collect severance of $400 per year of service, plus unemployment benefits, postponing the full effect for a time.

Meanwhile, Greenville is taking stock.

The same task force that tried to save Electrolux is now pushing to retain as many businesses as possible, while also recruiting smaller manufacturers from across the country.

"Smokestack chasing," as it's known, has a discredited history, since one community's gain is typically another's loss, often at substantial taxpayer expense.

But it makes sense for Greenville to target heavy industry, because those jobs best fit the workforce as it stands today. Besides, the town's plight generated a lot of publicity--it was the Midwest's plight in a nutshell, after all--and more than 30 manufacturers wrote the mayor to inquire about moving in, Walker said.

At least one big local supplier to Electrolux, Clarion Technologies, has scaled back its plans to shut down and follow its main customer south of the border. So far, however, only a smattering of new companies have opened in the subsidized industrial park that Greenville is touting.

With another round of layoffs looming, stress levels are rising.

Rumors persist among workers that Electrolux might not close after all, especially given the gush of orders that followed Hurricane Katrina. Some still believe that maybe Chrysler, Whirlpool or another big operator will take over. "People get their hopes up, then they're disappointed," said James Hoisington, president of UAW Local 137 and a 26-year veteran of the plant. "Companies haven't signed on the dotted line."

Deanna Jo Porter, a retired Electrolux technician who chairs the union's education committee, sees fear growing in the eyes of those who have devoted their lives to the factory. "These people have been on a real roller-coaster ride," she said.

Electrolux and a group from the local task force are working to cushion the blow by providing financial advice, retraining and counseling services. At a recent fair dubbed, "When the Jobs Leave," Porter was heartened to see Electrolux workers checking out the booth for a local community college and the online University of Phoenix.

Realistically, older workers will have a hard time rejoining the local job market as prospective employers choose from hundreds of willing applicants. At the same time, moving out of their hometown holds little appeal. One friend of Porter's intends to make ends meet by taking in sewing.

Porter is urging people to train for health-care or office jobs, but it's not easy. Paying for transportation and child care is an issue. Many workers at the plant lack home computers. And while a few went to college, at least a handful never learned to read, she said. Options are limited.

"I hate to think that next year at this time, Wal-Mart will be the highest-paying job around," Porter said. "There really isn't a good answer."

Merchants make adjustments

Though prosperous in appearance, Greenville lags in some key measures. Home values trailed the national average by about 30 percent as of the 2000 Census, and attractive family homes still sell for less than $150,000.

Greenville's population was half as likely to hold a college degree; median household income isnearly 40 percent lower as of the 2000 Census; and while the factory draws a higher proportion of its workforce from surrounding towns than Greenville, income in the city is certain to fall in its absence.

Some merchants say they are hurting already. Becky McCarty has cut the price of her gowns "tremendously" at the downtown bridal shop she opened four years ago after working for 15 years in the plant. "It's really scary," she said. "I wonder what's going to happen to our economy."

At Huckleberry's restaurant across the street, owner Mike Huckleberry decided that a $21 filet mignon didn't fit the new reality in Greenville. So he dropped the price to $14. The $10 all-you-can-eat taco special now goes for $6. Huckleberry, a gregarious fellow, also recently introduced comedy nights to build traffic on Thursdays, under the banner, "Greenville could use a good laugh."

Business went down right away after Electrolux announced it would leave, said Huckleberry, forcing him to economize in part by dropping health insurance for his employees. It also helped inspire him to run for Congress, an angry Democrat in a mostly Republican district. He has plenty of support in bashing NAFTA and other trade pacts viewed here as costly giveaways.

Misguided conservatives "seem to feel this is all a normal part of progress," Huckleberry said. "It's not normal. I don't see progress. We're not creating jobs in the U.S. that can sustain our standard of living."

Link to Grand Rapids may help

Yet at the same time Greenville's industrial core is eroding, its residential and commercial economy is growing.

The town has pushed hard to make itself an attractive place to live, believing it will bring wealth and talent to the community.

New homes have sprouted around its small lakes, a new Wal-Mart Supercenter has opened near the highway, a new wing is going up on the hospital, and new street curbs and flower planters line the historic downtown.

Hole, the real estate broker, is developing 13 single-family wooded home sites just north of Greenville. "It's better than being in the refrigerator business, that's for sure," he said.

Four of every five people who have responded to his ads so far have hailed from Grand Rapids. In fact, the highway to Grand Rapids may yet prove to be Greenville's lifeline.

It's only a little more than 30 miles from this quaint downtown to the bustling heart of a full-fledged city. Benefiting from a diversified economy, Grand Rapids is doing considerably better than the norm in this hard-pressed state.

Among the 762,000 residents of its metropolitan area, at least some are being lured by Greenville's charms: low crime rates, attractive housing, country setting and sense of community. "It's a great place to live," Huckleberry said.

For those who depend on Electrolux, however, staying in Greenville might be impossible.

At age 47, union president Hoisington is looking into truck-driving school, saying he might take advantage of federal retraining assistance available, ironically, through the hated NAFTA trade deal.

He has spent his life here and wants to keep it that way. "It's not easy to walk away," he said. "But if I have to, I have to."

Hoisington recognizes the town will look a lot different in a few years, with the factory gone and the condos and big-box stores going up.

"The whole country will look different," Hoisington said. "We'll get through it somehow. I don't lose hope. You've got to have hope."


Copyright © 2018, The Baltimore Sun, a Baltimore Sun Media Group publication | Place an Ad