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County businesses anticipate adjustments in wake of GM announcement

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Photo by Dan Lassiter

Nancy Martin, a floor clerk at Harris Ace Hardware in downtown Janesville, straightens out household items on store shelves. Dave Riemer, who owns Harris Ace Hardware stores in Janesville, Beloit and Monroe, says the stores haven’t made any immediate plans following General Motors’ announcement that it was closing its assembly plant in Janesville.

JANESVILLE — It might be fewer dinners out, passing on that new refrigerator or perhaps missing a loan payment.

Rock County businesses will measure the economic impact of the loss of the General Motors plant in Janesville in many ways.

That’s because, in a few years, a massive void will reduce the county’s annual personal income. GM alone paid out $229 million in wages in 2006.

Throw in the automaker’s two largest local suppliers, and the figure approaches $270 million.

“There’s no question that there will be an impact on the local economy in the short term,” said Doug Venable, Janesville’s economic development director.

Venable and others say it will take time for Janesville to rebound from the economic fallout created by GM’s decision to end local production by the end of 2010 at the latest.

GM’s 2007 payroll numbers for about 2,600 employees don’t align perfectly with the latest personal income figures compiled by the U.S. Bureau of Economic Analysis, which listed Rock County’s personal income for 2006 at $4.8 billion.

“It’s not a perfect comparison, but using those years, GM’s payroll was less than 5 percent of the county’s total,” Venable said.

That’s a smaller percentage than in years past, when Rock County’s economy was much less diversified and much more dependant on GM’s wages. In 1995, for example, more than 4,000 local GM workers earned $320 million, about 10 percent of the county’s personal income.

Local business owners and operators were unanimous in their agreement with grocer Phil Woodman’s assessment: “The impact of losing GM will be hard, and it will take time to get over.”

Woodman owns 12 grocery stores in Wisconsin and Illinois. He’s seen similar economic catastrophes in Kenosha, where Chrysler abandoned 5,000 people, and in Rockford, which has lost significant manufacturers.

“Nothing in the world is permanent but change,” Woodman said. “Communities change, and when you look back at Kenosha and Rockford, that change has been great.”

Working through that change will be difficult, local businesses said.

Brian Cherry, owner of Cherry’s Steak & Prime in downtown Janesville, has been around long enough to weather the auto industry’s cycles.

“But this is pretty much the mother of all bad news,” Cherry said. “This will take a bite out of everybody, particularly in our industry where people spend disposable income.

“We’ve just got to work our way through it.”

Over the years, Cherry said he’s learned a lesson that is particularly valuable in light of GM’s impending departure.

“This is a community that’s not huge, but it’s not small, either,” he said. “We really have to take care of our friends and neighbors and their businesses.

“I could probably go out to the national retailers and save a quarter on something, but I can go to Dave Riemer, who is a good guy, is local and I’ll get better service.”

Dave Riemer, who owns Harris Ace Hardware stores in Janesville, Beloit and Monroe, appreciates that.

His stores in Janesville and Beloit have lived through their share of production disruptions at GM, too. Sometimes, his business grew as idled workers came in while tackling jobs around the house.

“I wish I had a crystal ball on this one,” Riemer said. “We haven’t made any contingency plans or done anything proactively.

“That’s one of the advantages of being a small business; we can take it one day at a time and make adjustments.”

Riemer said he expects a pullback in the housing market. That, however, might send more customers his way.

Blackhawk Community Credit Union is thinking more proactively, said Frank Beres, the credit union’s marketing manager.

BCCU traces its roots to 1965 and workers at the Fisher Body Division of GM and the office employees of United Auto Workers Local 95.

Many GM employees and retirees are members of the credit union, which has three branches in Janesville and one in both Edgerton and Delavan.

“I’m sure there will be some impact, but I don’t think it will be as devastating as it would have been years ago when there were 7,500 people working at the plant,” Beres said. “What it will be is hard to tell.”

Beres said BCCU is kicking around ideas for products and services that could be offered to displaced workers. Maybe it will be a new form of credit counseling or a different loan repayment schedule.

BCCU, he said, also hopes some of those workers will step up and start the businesses that they have always dreamed about.

“People will rise up in the face of adversity, just as Janesville has to do in becoming something other than an auto town,” Beres said. “The question is what needs will they have and how can we help.”

Dave Grosenick, owner of Rock County Appliance & TV Sales in downtown Janesville, expects his business will be affected.

“We’re concerned, concerned for our friends and neighbors who are our customers,” he said.

Woodman is concerned, as well, but for somewhat different reasons.

“We have huge problems in the world, the least of which is what’s going on with GM,” he said. “We’re facing huge increases in energy costs, huge increases in food costs, and it’s pretty hard to live without energy and food.

“Are we happy about GM closing? Absolutely not.”

But Woodman said the plant’s closing will give Janesville an opportunity to change.

It also will force consumers to realign their budgets.

“We’ve been in a declining atmosphere for years, one where food consumed away from home has been increasing while food consumed at home has been declining,” he said.

“Maybe it will be good for grocery stores because it will force people to look at how they budget and eat in rather than dine out. Maybe we’re in the right place at the right time.”