In the Center of Auto Country, Adapting to an Uncertain Future

By Dana Hedgpeth
Washington Post Staff Writer
Friday, May 8, 2009

GRAND RAPIDS, Mich., May 7 -- Inside a beige, concrete warehouse -- slightly smaller than the size of a football field -- 10 workers toil to assemble rotors for $11,000 wind turbines that go on top of houses. It is the sort of work that city and state officials hope one day will provide a new vein of manufacturing jobs to replace those that have steadily disappeared from the local auto industry.

Ed Montgomery, President Obama's point man on helping communities hit hard by the auto crisis, visited Cascade Engineering on Thursday as part of a two-day tour of Michigan to talk with auto union leaders, business owners, community leaders and politicians about what the government could do to help Grand Rapids, a city of 193,000 about 2 1/2 hours west of Detroit, and places like it.

In Grand Rapids, Montgomery announced that the Environmental Protection Agency has set aside $10.3 million to help Michigan reuse old industrial plants. And he said a federal small business program will be expanded to help steer loans to auto parts makers and dealers.

"These are just two steps along this road," Montgomery said. "We are committed to working with state and local officials to bring back, revitalize and keep strong the Michigan economy."

Behind the niceties and plant tours, however, there is harsh reality. Replacing a major employer such as General Motors or Chrysler is no easy task, especially in this economy. It would take a number of smaller companies such as Cascade to even come close.

Grand Rapids and the neighboring town of Wyoming, population 70,000, once supported three GM plants employing about 6,000 workers. Now there is one GM plant with 1,500 workers. And it is expected to close by the end of the year.

In addition, Wyoming's city manager said he's worried that a Delphi parts plant, which has already cut its workforce from 1,400 to 700, could be in danger of closing if GM files for bankruptcy.

Officials are trying to attract new companies to offset the cutbacks, which combined with a dramatic slowdown in the office furniture manufacturing business -- another major industry here -- have pushed the area's unemployment rate to 10.5 percent.

Still, Grand Rapids has weathered the downturn better than other parts of the state. Several wealthy businessmen, including the founders of Amway and the Meijer retail chain, and an heir to one of the families that started office furniture maker Steelcase, have invested in the town, financing a new sports and entertainment arena, art museums and other facilities. A $1.4 billion construction boom tied to medical research, training and patient facilities is expected to create another 2,000 jobs on a mile-long strip known as Health Hill.

But there are limits to the transformation.

"Our health care development is helping our city," Grand Rapids Mayor George Heartwell said. "But it generally doesn't help the tool-and-die worker who was making $23 an hour and has lost his job."

City officials are trying to attract "green" manufacturing businesses. A company from Barcelona recently said it would set up a shop to manage the logistics of creating a wind turbine, coordinating work among different parts manufacturers. But the mayor expects the number of new jobs would be small.

Fred Keller, the chairman and chief executive of Cascade Engineering, is just getting his foot in the door of this new industry. He started his parts company more than 30 years ago, making plastics for car bumpers and chair parts for office furniture makers. He eventually got into making tubing for engine cooling systems and floor boards to reduce noise in cars. He also branched into making trash containers and bumpers for big trucks.

When the domestic auto industry collapsed, so did his sales, which are down roughly 40 percent from what he expected at his $280 million-a-year firm. Keller said he recently laid off 50 of his 500 employees in Grand Rapids and cut workers' pay. About a year ago, he shut down one of his automotive production plants.

Intrigued by the growing interest in renewable energy, Keller spent several million dollars to convert one of his warehouses into an assembly line for turbine rotors. He's also using some of the money to try to develop a lighter, cheaper turbine. He has a backlog of some 50 orders but cautions that the volume does not approach that of making parts for cars. His production line for making plastics for floorboards in cars, for example, once made 1.3 million parts a year, on average. He said he hopes to make 1,000 of the rotors for wind turbines this year.

"Automotive is so huge, there's nothing like it," he said, as he took a reporter on a tour of his plant.

At a local community college Thursday, Keller was one of 20 panelists to talk with Montgomery about the city's needs. The meeting was open to the public for about 15 minutes before it was closed to the media for what turned out to be a two-hour event.

Panelists said later they presented a list of needs, ranging from assistance to help laid-off workers pay bills and get health care, to help in cutting through Washington's red tape in applying for programs. Keller asked for loan guarantees for companies involved in "green" manufacturing, since banks are currently reluctant to lend.

Keller said Montgomery seemed ready to do what he could.

"He's saying all the right things," Keller said. "How is this going to show up at the door is still the question."

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