City braces for impact when cushions go away
Sweeping layoffs fueled by the demise of the local automotive manufacturing sector made a challenging economy even more difficult in 2009.
The challenges are likely to continue into and through 2010, according to local economic development officials.
Layoffs associated with the closing of the General Motors assembly plant in Janesville put more than 3,000 people out of work.
While many still are getting some form of health care and unemployment compensation benefits, others are not.
"We've certainly known that a lot of those people have a cushion associated with those jobs, but for many, the cushion is fraying at the edges," said John Beckord, president of Forward Janesville.
"Clearly, there are a number of people in the community whose safety net is about to run out, and that worries a lot of people."
While the majority of former Janesville GM workers have either left the company or transferred to other GM plants, about a quarter still are laid off, and benefits will start to end next year.
Former workers at Lear Corp. and LSI, two Janesville companies that supplied the GM plant, also are nearing the end of the benefits line.
Bob Borremans, executive director of the Southwest Wisconsin Workforce Development Board, said communities such as Janesville typically reach four economic milestones after a major plant closes:
-- The closing of the facility or facilities.
-- The loss or end of benefits.
-- The consolidation of smaller supply businesses.
-- The eventual collapse of the local real estate market.
"Our consultant has indicated that we're seeing the first of these," Borremans said. "But people haven't really reached the high stress level because they're still collecting their benefits.
"When the benefits run out, our concern is that there won't be a network for them, and all the local service providers are concerned about that."
If the loss of a dominant business can be compared to a form of economic death, where exactly is the community in the grieving process?
To answer that, Rock County economic development manager James Otterstein relies on a seven-step grief model that starts at shock and progresses through denial, anger, bargaining, depression, testing and acceptance.
Based on what he's hearing, Otterstein said the community appears to be moving between the depression, testing and acceptance phases
"This cycling, unfortunately, is being caused by the extended economic climate, and—based on current forecasts—it appears as though this cycling might potentially exist longer than a full calendar year," he said.
Reaching the acceptance phase and moving beyond it requires a thorough understanding of the economy and its nuances, he said.
For that, he looks to economic data that suggest personal savings rates are increasing, the nation's gross domestic product is starting to rebound and inflation is relatively in check.
Unemployment and job growth, however, are expected to remain problems through 2010.
"Locally, this will be the most difficult pill to swallow because it means that we'll likely remain in the 12 percent range," he said.
Overall, Otterstein expects that 2010 will be a bleak to mild year at best.
"Data gurus are forecasting that 2011 will be the year," he said. "Of course, this forecast will be refined and sliced multiple times before 2011 arrives, and I'm not sure that anyone really has the correct answer."
Beckord said 2009 was difficult, and it's questionable whether 2010 will be any better.
Still, he said, the ghost-town predictions of a year ago haven't materialized as realities in Janesville.
"In 2010, it's my hope is that we'll start to see some rebound in the basic industries we have and some settling in for the two or three companies that are now in some level of flux," Beckord said. "I hope we'll have some announcements of new employers or expansions that will mean jobs."
Beckord and Otterstein said a critical component of the latter is the recently launched Rock County 5.0, a public-private initiative designed to foster collaboration, communication and economic development connections for the benefit of all county communities.
"It's not magic that you throw money out there and projects just appear," Beckord said. "We need a more aggressive outreach effort such as Rock County 5.0 that will result in more leads.
"I believe the table is set for us as the economy creeps back. Companies will look at Janesville and Rock County and react favorably to the labor pool here, an abundance of extremely competitive space, low interest rates and, for exporters, the attractive value of the dollar."
Feb 19, 2010 at 8:37 a.m.
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Janesvillean... are you blind... try to read my post again... "not ALL of the people that collect unemployment are like this, as I know some of them actually look for work regularily and/or go to school now"... and as far as the fewer jobs go... duh, obviously there are less jobs, but I know of people that won't take a job because they think it's "below" them... and if that is the case, then maybe they shouldn't complain about being unemployed...
Feb 19, 2010 at 7:11 a.m.
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dkush21-Correction, an employee doesn't pay into unemployment. Only your employer pays into the program and the amount is based on how many unemployment claims the employer has been a party to in the past.
Feb 18, 2010 at 4:52 p.m.
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chemical_6, you do realize that there are 7 *million* fewer jobs out there? Contemplate that. It's larger than the population of the entire state you live in. For many people going out and looking for a job is their job and they are not sitting around. I can hardly imagine a more offensive comment to post than yours.
Feb 18, 2010 at 4:46 p.m.
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Obamas' outlook--We're not broke-we're printing money every day!!!
Feb 18, 2010 at 4:45 p.m.
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I am employed, but have you looked at the jobs sections lately. Not many jobs at all. And unemployment is an insurance that you pay into when you're working and are entitled to.
Feb 18, 2010 at 4:15 p.m.
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I am sure this comment will be removed because it will offend someone, but maybe people should quit sitting around, and go get a damn job. I am so sick of people saying, "no one is hiring". give me a break... there are jobs out there, you're just not looking hard enough, and because of it, I get to pay your weekly "benefit"... not ALL of the people that collect unemployment are like this, as I know some of them actually look for work regularily and/or go to school now, but there are those that just suck the state dry, and then wonder why the economy is the way it is... whatever.
Dec 22, 2009 at 2:52 p.m.
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matt~ correct again. It's the age of information. The internet + the "baby boomer" market. There's a paradigm shift in business and principles behind those businesses that can't be ignored. People need to be re-educated in order to thrive in this new economy. What you don't know, can and will hurt you in today's age.
Dec 22, 2009 at 9:11 a.m.
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We're in a time of monumental change. It's not just about Rock County or Janesville in regards to business anymore. We're in a global economy whether any of us like it or not. The internet has reshaped the way things are being done now. There's always going to be the fast food businesses and other low income jobs. There just isn't going to be the manufacturing jobs out there that we've become accustomed to in the past. New and emerging industries are on the horizon and those are the new jobs that are filling the void left by the industrial collapse.
Dec 21, 2009 at 9:28 p.m.
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Well, thanks for that dose of postive optimistic thinking!!! What a great way to lure potential business to the area...makes a great civic development campaign. "Rock County, The Worst Is Still To Come." I don't know, I may not be the smartest person around...but I think we can do better!
Dec 21, 2009 at 7:15 p.m.
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carlitos, actually there is a company that's not only bouncing back, it never took a vacation!
Dec 21, 2009 at 3:07 p.m.
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oops 3000
Dec 21, 2009 at 3:07 p.m.
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it was far more than 300 or are they only counting GM and lear workers several other companies down sized and those are IMO not mentioned in the big picture. IMO I believe we better buckle up for the long rough road that lies ahead. There doesn't seem to be anyone company bouncing back at all. Where I worked is still cutting jobs and it looks like without call back option.
Dec 21, 2009 at 1:25 p.m.
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Another example of the almighty Gazette (the media) doig their best to put the fear of God into people because it sells. Janesville was here before GM and will live on after GM. It's up to the community! I have faith in US.
Dec 21, 2009 at 12:38 p.m.
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prevention- yes I remember Titanic. Front row all the way down to the right. It was the only seats left to find. Neck hurt for a week.
Dec 21, 2009 at 11:56 a.m.
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I think it's clear that Janesville's leadership is very much still in the denial stage and will be until someone can bring vision for change. They have also missed great opportunities to move forward by not taking advantage of the stimulus billions available for the taking if they could have come up with ideas to use it for. What businesses will want a work force that was heavily and powerfully unionized, considered by some to be generously spoiled with high wages and benefits and have now sat idle for the past year? I think the city council should hold a séance and ask the spirit of Ken Hendricks what a man of vision would do! Or maybe start listening to ideas outside of their box!!!
Dec 21, 2009 at 8:22 a.m.
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And with this great nugget of information, our beloved city council still spends money at a break-neck pace. Thank you for all the stupid projects and wasteful spending city council. Your starting to act like your Washington counterparts....
Dec 20, 2009 at 11 p.m.
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The 4th of the 4 likely scenerios for Janesville cited by Bob Borremans, executive director of the Southwest Wisconsin Workforce Development Board, has little merit. Our real estate market will never collapse, though it will get worse than it is now. Janesville will be just fine in the long-run despite all of the doomsayers predictions.
Dec 20, 2009 at 8:47 p.m.
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I agree, Janesville. I haven't been to the theatres in MANY years... probably since GOOD WILL HUNTING/TITANIC. But, that was at the Rock. I would much rather go there, for reasons you mentioned, that the "new" cinema.
Dec 20, 2009 at 8:41 p.m.
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No need to worry those in DC. will take care of you
Dec 20, 2009 at 6:52 p.m.
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Wildwood Theatres is preparing for the impact. In addition to announcing they will be closing the Rock Theater after adding on to Movies 10, http://www.gazettextra.com/news/2009/oct... , they raised their ticket prices on the 18th of December. Matinee tickets are now $7 ($10 for the 3D version of Avatar).
I suppose with more screens in one building, they can service more people with a smaller staff and reduce their overhead (taxes, utilities and insurance at Rock Theater in exchange for a smaller increase at Movies 10). It will be a shame when the Rock Theater closes. I appreciate not having to fight traffic through that multi-lane bottleneck to get to Movies 10.
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