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Rock County isn’t alone in battling unemployment woes

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Tony DiNicola

Rock County - Historical unemployment rates

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Photo by Cat Szalkowski-Patneau

Universal Recycling Technologies in Janesville has seen an increase in business over the last several months and has hired two more shifts to add to the two existing shifts and bulked up employee numbers in the original shifts.

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Photo by Cat Szalkowski-Patneau

Larel Steel works on the computer and television disassembly line at Universal Recycling Technologies in Janesville. Steel is among a large group of newly hired employees at URT since an increase in business over the last six months

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Victor Grassman

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Cynthia L. Harrington

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Terri S. Roessler

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Wendy Bauer

JANESVILLE — It was the perfect economic storm.

Just as the local economy started to follow the national economy into the tank, General Motors decided in 2008 to pull the plug on its decades-old manufacturing plant in Janesville.

The fallout left thousands without jobs. While some dislocated workers have found other jobs, often at lower wages, others have gone back to school.

Thousands still are looking for work.

In April, Janesville’s unemployment rate was 11.3 percent. Beloit’s topped the state at 16.8 percent. Overall, the local Metropolitan Statistical Area’s rate was 11 percent, the only one in the state in double digits.

Make no mistake, the Janesville area is a difficult place to find a job.

Forbes magazine recently ranked Janesville as the 391st most difficult job market in the country.

That’s 391 out of 397.

About the same time, however, Forbes ranked Janesville:

-- 114th out of 184 small MSAs as the best small places for business and careers.

-- 40th in projected economic growth.

-- 131st in projected job growth. Among Wisconsin MSAs, only Racine and Fond du Lac had higher rankings.

The varied rankings left many local economic development and business leaders wondering if Forbes compares its own ratings.

Another website last week listed the 20 most unemployed cities in the nation. Janesville was not on the list, but 11 communities in California were, including El Centro that topped the list with an unemployment rate of 27 percent.

What the Forbes and other rankings show is that Janesville is not dead. While it’s had a tough economic go of it, the future is promising.

The past

The Janesville area’s annualized unemployment rate for 2009 was 12.5 percent, a number not seen since 1991, when extensive auto industry layoffs pushed the local rate to 12.2 percent.

The lowest local unemployment rate in the last 20 years was 3.9 percent in 1996 and again in 1998.

The 20-year average is 5.93 percent.

It’s become a popular to say that Rock County has up to 10,000 people unemployed. April’s unemployment numbers, however, suggest that nearly 8,700 local people are without work.

The 20-year history, however, indicates that about 5,000 people always are out of work in Rock County.

Bob Borremans, executive director of the Southwest Wisconsin Workforce Development Board, said unemployment rates always are fuzzy.

“There’s a concern among a lot of us that the numbers are higher,” he said. “If people are not in the labor force and have exhausted their benefits, they’re not counted.

“They’ve given up looking for work or have chosen to do something other than seek unemployment. They’ve gone underground.”

Vic Grassman, Janesville’s economic development director, agrees that unemployment is a serious local problem.

But, he said, full employment is probably an unlikely proposition for Janesville or any other community. That means the problem involves far fewer than 10,000 dislocated workers. Realistically, he said, it involves finding jobs for 4,000 to 5,000 people.

“There’s no question that our weakness right now is our strength; we’ve got a lot of unemployed people,” Grassman said. “We’ve got big challenges here, but we’re not alone in that.

“Janesville is not the island it’s been portrayed as. We have to figure out how to compete and keep a positive attitude. It’s my job to say that, but I truly believe it.”

The present

While the Forbes ranking contributes to Janesville’s portrayal as an island, a look around Lake Michigan offers a different perspective.

Wisconsin, Illinois, Indiana and Michigan have a combined 52 MSAs. Through April, 30 of them—58 percent—reported double-digit unemployment that averaged 12 percent.

Local dislocated workers who visit the Rock County Job Center or the state’s online jobs databank are finding more listings.

In September, 13 new jobs were posted for Rock County. In each of the first four months of this year, there were nearly 300.

“There are some decent jobs out there,” Borremans said. “I look at the numbers closely, and there tend to be more good jobs in the area.

“But they are not paying what we’re used to, and they never will. The durable goods manufacturing wages we’ve seen in the past are not coming back for this area or any other area.”

The area’s wage and benefit structure changed dramatically with the demise of the local auto industry and its above-average pay.

One set of numbers from the Bureau of Labor Statistics shows that 2007’s average hourly wage of $23.27 fell to $18.82 in 2009 and has continued to drop in the first four months of 2010.

“The salary and benefit structure has changed quite a bit in this area in the last year,” Grassman said. “The labor force is restructuring.”

Cindy Harrington, Manpower’s branch manager for Rock and Green counties, has seen evidence of that.

It’s a matter of supply and demand, she said. With the high auto industry wages gone from the market, the local wage structure has dropped. Couple that with an extremely wide pool of job candidates, and lower wages can be expected, she said.

“We’ve seen evidence of companies paying a certain amount two years ago who are now paying less,” she said.

A survey of local job openings reveals a variety of positions and pay scales.

For example, McDonald's recently listed 12 openings in Janesville: eight of them for management positions and four for crewmembers who typically make minimum wage.

United Alloy, a Janesville manufacturer, listed four positions on its website. Three of the four were for salaried jobs, including a product development engineer. An hourly welding position offered new graduates starting pay of $13 to $14 per hour.

“We started to see things pick up in November,” Harrington said, noting that her office is becoming busier filling the staffing needs of local manufacturers.

Historically, recruitment and staffing companies such as Manpower are among the first affected by a recession. They’re also among the first to emerge.

“That’s what we’re seeing now,” she said. “A customer gets a big order but isn’t sure if there’s another order after that.

“They need short-term staffing to see if the rebound will be sustained.”

Since April, Manpower has filled staffing orders for eight manufacturers who haven’t used the agency’s service for two years or more.

“Maybe it’s only one or two jobs, but that’s one or two jobs more than they had last year.”

The future

Wisconsin started adding jobs in the first months of 2010 and is expected to continue doing so, according to a report from the state’s Department of Revenue.

Job growth will be slow, however, and pre-recession employment levels are not expected until mid 2013.

The Janesville area is adding jobs, as reflected in the most recent unemployment report from the state’s Department of Workforce Development.

In April, the area added 987 jobs, and nearly 1,500 people came off the unemployment rolls, the department reported.

Borremans is hesitant to say local unemployment has bottomed out.

“I still think this is caused by people dropping out of the workforce more than actual job growth,” he said. “Let’s see if this upward employment trend continues for several months, then I will begin to believe it signifies a turnaround in employment.”

Borremans said future jobs will require higher levels of education and will pay in the range of $13 to $18 per hour, some with benefits, some without.

“That will be the norm for this area, and people need to adjust to it,” he said. “If you stay in the area, you will be able to get a decent job if you get educated and get 21st century skills.”

As summer approaches, many local workers dislocated in 2008 will see their unemployment benefits end.

Local observers say that some job openings, particularly those that pay close to minimum wage, are unfilled because they’re not as attractive as a weekly unemployment check that on the high end averages about $9.70 per hour.

“I’ve heard lots of people say they can’t afford to take a job at $8.25, so there are definitely jobs going unfilled,” Borremans said. “But unemployment benefits will end, and it’s always better to be looking for a job when you actually have a job.”

While Borremans isn’t ready to say the Janesville area has bottomed out economically, Grassman and Harrington are more optimistic.

“We’re getting lots of inquiries and hearing rumblings of expansions,” Grassman said. “It will take some time, maybe 12 to 18 months, but we’re heading in the right direction.”

Harrington said the Forbes ranking gave Janesville a temporary black eye.

“This, too, shall pass,” she said. “I think we were singled out because we were a GM town and it makes a good story.

“But we are on our way up. I think we hit bottom two or three months ago.”

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Officials say workers need to realize things have changed

GOEX Corp. in Janesville is in need of an extrusion operator and a customer service/planning specialist.

The pay is negotiable and based on experience.

American Farm Implement & Specialty, also in Janesville, is looking for a welder.

The pay is $15 to $17 per hour.

United Alloy, another Janesville manufacturer, wants to fill a salaried position for a product development engineer.

All three are examples of jobs recently posted on the Job Center of Wisconsin’s online jobs board.

A search conducted June 3 for the previous 30 days yielded 119 jobs and 225 openings.

“There are some decent jobs out there,” said Bob Borremans, executive director of the Southwest Wisconsin Workforce Development Board.

But they carry some caveats, he said.

Applicants might have to travel to land a job.

They might have to update their skills.

And they most certainly need to realize that the high wages established by the local automotive industry are gone.

“The durable goods manufacturing wages we’ve seen in the past are not coming back for this area or any other area,” Borremans said.

Skills in demand

Terri Roessler is the chief executive officer of United Alloy, a maker of fabricated metal parts and components for the industrial and power generation markets.

After years of gains, United Alloy struggled in 2009. Twelve people were laid off; hours were cut for remaining employees.

Revenues dropped 27 percent.

Late in the year, the company became more focused on cultivating new customers.

The strategy appears to be working, and United Alloy has landed several big orders. While it’s added and filled several new positions, several others are open, including the product development engineer.

New orders have driven the demand for welders, Roessler said, adding that four to five applicants show up every day at the plant on Kennedy Road.

“We added two welders in February and are currently recruiting for three additional welders,” she said.

The starting pay for new graduates—$13 to $14 per hour—is competitive, Roessler said. Experience is rewarded with more pay.

But it’s a tough job to fill because of stringent requirements attached to the company’s products.

The company uses three competency tests to assess welders.

The first is basic and determines a candidate’s ability to use measurement devices. The second is a multiple-choice blueprint-reading exam based on a United Alloy product. If the candidate passes 70 percent of the second exam, he or she moves on to a physical welding test.

Of 45 recent applicants, half appeared on paper to have the skills. Twenty passed the first basic test, but only 10 of those passed the blueprint test. None went on to pass the physical welding test.

“As our product consists of diesel fuel tank containment vessels, we are unable to hire anyone that does not meet this standard,” Roessler said. “The weld seams must have maximum penetration without any leaks. There is zero tolerance for diesel fuel to leak from our product.”

Roessler has her fingers crossed that skilled applicants soon will pass all three tests.

“They can expect to be part of a welding team that has the highest level of quality in the power generation diesel fuel tank market, earning very competitive starting wages in the low teens, and can progressively develop both professionally and economically by assuming greater responsibility and skill level within our levels program,” she said.

Applicants aplenty

Universal Recycling Technologies is another Janesville company that’s growing.

It’s also hiring, and it’s often flooded with applications from people who run the gamut of qualifications.

URT, an electronic waste recycler that has 235 employees at it’s Janesville plant, recently posted openings for an administrative assistant, a truck driver and a supervisor on its “D” shift, which runs from 6 p.m. to 6 a.m. on Friday, Saturday and Sunday.

All pay between $12 and $14 per hour.

“We’ve had no problem filling positions for regular work weeks, but we’ve had some difficulty on our nonstandard D shift,” said Wendy Bauer, the company’s human resources manager. “But for the right person, that shift opens up the rest of the week for school, parenting or another job.”

URT uses a variety of resources to recruit employees. It certainly gets its share of walk-in applicants.

“It depends on the position, but generally we’ve been getting pretty good volume,” Bauer said. “This time around, we’re seeing a pretty broad range in experience and skill level, but I’d say the bulk are experienced individuals.”

Despite the large number of unemployed workers in the area, Bauer said URT sets its wages carefully to attract the talents and personalities that fit the operation.

“We’ve interviewed and hired a number of people for mid-level to management positions who have acknowledged that the pay isn’t quite what they were looking for,” she said. “But they’ve been able to look at the company and see beyond that, see that there’s a future of growth here.”

Manufacturing growth

United Alloy and URT are examples of a hiring resurgence among local manufacturers.

With an office in Janesville, Manpower also is seeing a revival driven by the local manufacturing sector, said Cindy Harrington, who manages the staffing agency’s operations in Rock and Green counties.

Manpower typically helps employers fill staffing needs. It also serves job seekers.

“I’ve been with Manpower for 34 years and have lived through recessions and the ups and downs in the auto sector,” said Harrington, whose husband was in management at the GM plant in Janesville.

“But I’ve never seen a year like last year. There was the national downturn, and GM just accelerated it in Janesville.”

Manpower saw an uptick in its local business in November. Since April, it’s helped eight local manufacturers fill positions.

“We’re seeing a broad range of jobs open from retail and service to manufacturing,” she said. “We’re also seeing a demand for skilled trades.”

The latter includes positions for maintenance mechanics and operators of computer numerical control machines that automate production tasks.

They are tougher to fill, Harrington said, because skill levels must be higher. Dislocated workers are being retrained in the field, but they’re not yet workplace ready.

In Rock County, starting wages for CNC operators are typically $15 to $20 per hour. The Madison market pays in the low to mid $20s, while Milwaukee companies pay even more.

“Some of that is a cost of living issue,” Harrington said, adding that Rock County tends to be a pocket of lower wages.

Some lower wage positions are not being filled, she said, noting that an area company recently sought a maintenance mechanic for $11 per hour.

“We told them that there was more value than that, and, as it turned out, the job went unfilled,” Harrington said.

Some jobs, particularly those near the minimum wage, go unfilled because dislocated workers make about $9.70 per hour in unemployment benefits that will eventually end.

“That always happens,” Harrington said. “It’s certainly not something that’s unique to this time period.

“I’ve heard some people say they’ve still got a year of benefits left, but if they’re not in school or some other program, they could be too late. You have to start the job search early because it might take two years.”