Community, former GM workers cope with plant closing
By Sara Jerving
Wisconsin Center for Investigative Journalism
MILTON — Former General Motors employee Ben Applebeck applied for 50 jobs in the past three months, but not one business was hiring.
Applebeck, 49, lives in Rock County, where the shutdown of the Janesville GM plant represents the biggest single economic blow inflicted upon a Wisconsin community since the recession began in December 2007.
Rock County’s unemployment rate is 10.8 percent — one of the worst in Wisconsin. Beloit, the county’s second-largest city, is the hardest-hit city in the state with a 16.5 percent jobless rate.
The situation is especially troubling for Applebeck and his wife, DiAnne. Their yard was flooded two and a half years ago when Grass Lake overflowed, and the bloated body of water continues to lap near the edge of their house and has seeped into their garage.
As Applebeck described the difficulty in selling a house in this area — even on dry land — a neighbor floated by in a paddleboat through water that now covers most of the Applebecks’ 5-acre wooded lot.
Both Ben and DiAnne Applebeck used to work for General Motors in Janesville. But the assembly plant that made Chevy Tahoes and Suburbans, GMC Yukons and Isuzu trucks closed after three waves of layoffs in 2009, taking with it the jobs of some 2,800 employees, including the Applebecks.
The four-million-square-foot plant that had supported generations of well-paid middle-class workers now sits idle.
To blunt the impact of the job losses, General Motors offered several options for employees, such as early retirement for those who were eligible and transfers to one of its other plants in states including Indiana, Kansas, Texas, Michigan, Missouri, Louisiana and Ohio. Since the closing, 909 took early retirement and 728 employees transferred to other GM plants, according to newly released data from GM.
With two children, Benjamin, 17, and Mitchell, 9, to support and a house that no one wants to buy, DiAnne Applebeck, 46, became one of them.
For the past few months, she has made the 574-mile round trip nearly every weekend from Fort Wayne, Ind., where she now lives and works, to see her family. She plans to keep doing it for five years until she reaches the 30-year service mark that would qualify her for full retirement benefits from General Motors.
- VIDEO: DiAnne and Ben Applebeck talk about their shattered dreams — and current prospects.
The effects of the closure on the 160,000 people of Rock County go beyond unemployment. The average hourly wage for private sector Janesville employees dropped from $23.27 in 2007 to $18.82 last year, according to the U.S. Bureau of Labor Statistics. Ben Applebeck knows laid-off auto workers who worked for more than 20 years at GM who now deliver pizzas at a fraction of their former pay.
Increasing signs of distress — including a drop in United Way contributions and a rise in homelessness, home foreclosures and reports of child abuse or neglect — are evident in Rock County since the recession and layoffs began, local officials say.
Leaders in Rock County point to new business activity, a convenient location between Chicago and Madison and a ready workforce as strengths to build upon. But experts who have studied Rock County and the dislocation caused by auto-plant closings warn the days of low-skill, high-paying jobs are over.
Benefits for laid-off employees are ending
Benefits that have kept many laid-off GM workers afloat now are ending. Supplementary unemployment payments, known as “sub pay,” began drying up in May. Sub pay, which provides 72 percent of a worker’s base salary, lasts from one to three years, depending on how long an employee has worked for GM. Company-sponsored health insurance started to run out in late 2009.
Rock County Circuit Court Clerk Eldred Mielke, who has watched the county’s foreclosure rate mount, wonders if the county has hit bottom.
“I think we will have a more realistic view of the impact of the closings after a lot of the benefits run out this year,” he said.
Even worse off are roughly 2,170 people who worked at companies that supplied GM, such as Lear Corp. and Logistics Services Inc., who also lost their jobs but without the added benefits GM workers were offered. The cumulative effect of those job losses pushed the unemployment rate in Rock County to a high of 13.7 percent, or 11,354 people, in March 2009 — double the rate from two years earlier.
Car manufacturing had been part of Janesville for nearly a century. General Motors estimates the peak came in the late 1980s to early ’90s when the plant employed about 7,000 people. The layoffs in 2008 and 2009 rank as the largest since Wisconsin’s recession began, state Department of Workforce Development spokesman John Dipko said.
“When GM closed there was a ripple effect across the entire community; hotels needed less staff, restaurants needed fewer servers, it was an economic multiplier,” said Robert Borremans, executive director of the Southwest Wisconsin Workforce Development Board.
The state and federal government have weighed in to help dislocated workers in Rock County. The U.S. Department of Labor announced in June a $1.4 million statewide grant to help 1,680 people who are either receiving job training from the state or are on a waiting list due to funding shortages. Since 2008, the state of Wisconsin has set aside $6.1 million for training and job-search assistance for laid-off auto workers in the region, according to the Wisconsin Department of Workforce Development.
Jobs are far away, hard to get
For those who took the transfers, long-distance commuting is taking a toll. Jane Dohner’s husband, John Jr., a representative of United Auto Workers Local 95, transferred to Fort Wayne about a year ago. She now takes care of two children at home and a rural Edgerton farm including horses and cattle — responsibilities she used to share with her husband, who also is chairman of the Sumner Town Board and a volunteer firefighter.
Other members of her family also have been affected. Jane Dohner’s brother took an early retirement and two brothers-in-law have transferred to other GM locations.
“You feel like a single parent sometimes; you feel like you’ve gone through a divorce. I never wanted to live like this,” she said. “But we are grateful for what we have. He still has a job, we still have insurance, and we can keep our house.”
Times were especially hard when Dohner lost her mother to cancer in December and her husband wasn’t there. Now, her father is fighting cancer.
“How long families can sustain like this is unknown, but we do know it’s not healthy,” said Lori Stottler, the clerk for Rock County, who also sits on the Janesville School Board.
Former GM employees who didn’t take an earlier transfer and weren’t eligible for retirement got letters May 11 with a final job offer to transfer to the General Motors plant in Lordstown, Ohio. Those who didn’t report for work on June 1 at the plant 500 miles east of Janesville were placed on leaves of absence without any benefits. They were told they could be rehired if the shuttered Janesville plant ever reopens.
Jim Downing turned down offers to relocate, even though both he and his wife, Diane, were laid off — his wife by the Edgerton School District. Downing, 42, said he likes living in rural Edgerton and plans to retire there.
His sub pay ended this summer, and he’s been told other benefits will run out soon. That would leave his family with only unemployment checks and the pay from his wife’s summer job at a golf pro shop for support.
Downing himself is still hunting for work. He’s been unemployed for a year and a half.
Foreclosures, homelessness up
The continuing unemployment in Rock County has led to increased housing insecurity, with the numbers of homeless and foreclosures on the rise. Other signs of discord, including child abuse and neglect reports, also have increased significantly, social-service agencies report.
The number of homes in foreclosure in Rock County has skyrocketed over the past couple of years, from 55 homes repossessed by the bank in 2008 to 421 last year — a 665 percent increase, according to Realty Trac Inc., which tracks home foreclosures. Statewide, the number of repossessed homes rose much less steeply, 38 percent, from 7,713 in 2008 to 10,661 last year.
This year is on pace to be even worse yet: In the first five months of 2010, there were 283 homes repossessed in Rock County.
Another 100 people are on the streets of Rock County since the layoffs and recession began, according to Marc Perry, director of planning and development for Community Action Inc. in Janesville.
The nonprofit agency counted 294 homeless people in 2007; last year there were 403, Perry said — a 37 percent increase that has overwhelmed local shelters. Statewide, the homeless population also rose, but at a much smaller rate, according to the Wisconsin Department of Commerce, which funds homeless shelters. Commerce-funded shelters saw a 6 percent increase to 17,237 people in 2009 compared to two years earlier, spokesman Tony Hozeny said.
“Having housing is the linchpin of stability,” Perry said. “If housing is interrupted, it literally disrupts everything else in a person’s life.”
Although few former auto workers likely went from full-time jobs to homelessness, the widespread unemployment has created ripple effects. Families who formerly provided financial support for others are no longer able to because of their own situations, said Nancy Brooks, prevention manager of the nonprofit Exchange Family Resource Center in Janesville.
“Some of the families we work with in the past may have called grandma if they were short on rent so they don’t get evicted,” Brooks said. “Now grandma doesn’t have the extra cash to help. We are starting to see that quite a bit.”
Unemployment hurts children, social services
Reports of child abuse and neglect declined statewide since 2007, but in Rock County, the numbers are up.
Between 2007 to 2009, reports of child abuse or neglect in which a child was deemed to be in a threatening environment rose by 30 percent, from 1,205 reports to 1,568, according to the Rock County Child Protective Services office. Statewide, the number of such reports dropped 1.5 percent from 27,233 to 26,819 during that same time.
Brooks’ agency counsels some of the families reported for alleged child maltreatment. The exchange center saw an 83 percent jump in the number of referrals between July 2008 and June 2009 — from 72 children to 132 — compared to the same time period a year before.
For all except one child, Child Protective Services noted the abused or neglected children lacked basic services, including food, clothing, housing or transportation. In the previous year, about one-third of the children referred to the agency lacked basic services.
“With the poor economy, the parent’s stress levels are way up, and then you increase that stress level by a child who is acting out, and it becomes a pretty volatile situation,” Brooks said. “You can have the opposite effect too. You have the parent who’s so stressed out that they shut down and withdraw from their children.”
United Way of North Rock County, which funds social-service programs in communities north of Beloit, also has seen a drop in donations, fueled in large part by the loss of the GM workforce.
The organization’s budget dropped 24 percent between 2007 and 2009 to $1.24 million, most of it due to loss of donations from GM, its employees and suppliers, said Tammy DeGarmo, the agency’s director of resource development.
Economic development efforts underway
There are signs of hope in Rock County. Local economic-development officials point to nearly 30 large new or expansion projects worth about $325 million announced since 2008. The largest is the construction of the St. Mary’s Janesville Hospital and Dean Clinic at a cost of $150 million.
Ed Montgomery, executive director of the White House Council on Automotive Communities and Workers, visited Janesville and Kenosha in mid-June with a team of officials from various federal agencies. The delegation met with local workers, officials and business leaders to discuss ways the federal government could help the hard-hit areas recover.
In Janesville, Montgomery mostly listened, promising to bring back the requests for assistance to Washington, D.C. Later that day, Montgomery cautioned during a Wisconsin Public Television interview that recovery is slow and “built a brick at a time.” He noted that his hometown of Pittsburgh was once dominated by steel mills. Now the mills are gone, replaced by hospitals, information technology businesses and other manufacturers.
“Often there’s a period of steady decline, in which unemployment rises as that employer shrinks,” he said. “And then you need to get new investments in … you need to attract new capital, you need to expand existing employers, you need to make sure the workforce is ready, you need to make sure you have the infrastructure and all that in place.”
Lawrence Molnar, associate director for the Institute for Research on Labor, Employment and the Economy at the University of Michigan, has studied about 50 regions in six states impacted by the restructuring of the automotive industry, including Rock County.
This region, he said, should work on developing new small businesses and not count on another large manufacturer to replace General Motors.
“The area will not go back to low-skill, high-wage jobs — those days are gone,” Molnar said. “An important way to make up for the gap in the economy, rebuild the community and create jobs is new venture creation.”
Of the places he’s studied, Molnar said, Rock County had one of the most organized community responses to the economic changes and is well-poised to recover.
Five public and private sector partners have collaborated in an initiative called Rock County 5.0. The project aims to raise $1 million, mainly from the private sector, to fund five initiatives to retain and expand local businesses, attract new investment and other strategies to boost the economy over the next five years.
County residents have learned a painful lesson about the value of relying too heavily on one industry, said Vic Grassman, Janesville’s director of economic development.
“GM is a great example of when you have all of your eggs in one basket, and it goes down, there are significant problems in the area,” Grassman said. “Hopefully we can diversify our investments, and it will result in a stronger local economy.”
Community pulls together
The community has come together to help itself in other ways besides economic development. The annual food drive that GM used to run was taken over by the Janesville School District. In 2009, the district raised $40,000 — double the amount that the company used to raise.
Although he’s still out of work, Jane Dohner’s brother, Don Heritage, is lending a hand to other displaced workers. Heritage helps his sister run her farm and mows the lawn for the family of one of his friends who commutes to the GM plant in Indiana. He also has moved furniture for those who’ve relocated and watches the homes of those making long-distance commutes.
“This community tends to kick into gear when it’s down on its luck,” said Stottler, the county clerk. “I think we will hit a painful point when the schools, human services and county will really suffer, but then we will see an upswing.
“I have a feeling this community is going to come out ahead and better off than it was.”
The nonprofit Wisconsin Center for Investigative Journalism (www.WisconsinWatch.org) collaborates with its partners — Wisconsin Public Television, Wisconsin Public Radio and the UW-Madison School of Journalism & Mass Communication — and other news media. This report was prepared in collaboration with The Janesville Gazette and is part of a project also involving WPT and WPR.