Rural jobs leaving; some fear they not return
Rural factories heading south
DES MOINES -- Jobs are leaving the rural Midwest in increasing numbers and economists say, unlike the plant layoffs in previous recessions, factory closings may mean they are gone for good.
Rural factories across the nation cut 4.6 percent of their payrolls last year and about 140 plants closed, according to Bureau of Labor Statistics. Nearly 500,000 jobs were lost in February and March alone.
Operating capacity at the nation's factories is the lowest since June 1983, according to a recent Federal Reserve report.
Mark Drabenstott, an economist with the Federal Reserve Bank of Kansas City, said factory closings represent 45 percent of layoffs last year at rural factories.
One factor may be globalization -- the cheap labor and land that drew many companies to the rural Midwest can be found even cheaper in some other countries, Drabenstott said in a recent newsletter.
"Rural areas are not just competing with their city counterparts they're competing with locations elsewhere in the world that in many cases offer substantially lower labor costs," he said.
One recent example may be the closing of a Maytag Corp. refrigerator factory in Galesburg, Ill. The plant will close by the end of next year, leaving 1,600 workers without jobs.
Much of the work will be transferred to an existing plant in Iowa and a new plant to be built in Reynosa, Mexico, which will employ 500 people.
The average worker at Galesburg makes $15.14 an hour while workers at Reynosa plants make as little as 58 cents an hour.
Maytag produces $4.7 billion worth of washers, dryers, refrigerators, ovens and floor cleaners annually. Its brands include Amana, Hoover and Maytag.
The Iowa-based company says it has been forced to adapt to a global market that has driven down prices.
"I'm a strong advocate of creating American jobs," said Maytag CEO Ralph Hake. "I'd much rather manufacture our products in the U.S., but we must make good business decisions."
Jim Brown, spokesman for the International Association of Machinists and Aerospace Workers in Chicago, said the company's decision to move the work for cheaper labor, fewer regulations and lighter tax burdens betrays American workers.
"To me it is no different that if they took a match and they went out to the nearest flag and burned it up because they don't give a damn about this country," he said.
Townspeople in Galesburg, population 33,706, say losing their largest employer, with a payroll of about $130 million, will have a tremendous ripple effect.
"I think everybody says its going to be difficult. Throughout the town there's been a slowdown in economic activity," said Mayor Bob Sheehan who also runs a Midwest Photo shop in the town's central business district.
"I guess the town attitude is a bit resentful and also a bit of a shock. But now people are trying to prepare for the future and trying to get things going."
Finding jobs will be tough, he said. Other companies nearby -- a steel building manufacturer, a rubber products plant and a screen factory -- all announced permanent job cuts in recent months.
Drabenstott, director of The Center for Study of Rural America, a research division of the Federal Reserve Bank of Kansas City, says rural factories have slashed payrolls by more than a tenth since 2000.
"Rural areas have typically offered an energetic work force, an inexpensive work force, inexpensive land and in many cases inexpensive taxes. That formula is increasingly called into question in a globalizing economy where there are locations that have even more inexpensive land and labor," he said.
Iowa has lost 14,063 jobs to business closings since January 2000, according to the Iowa Association of Business and Industry.