Assessing Obama's promises of jobs in a hub of manufacturing

By Michael A. Fletcher
Washington Post Staff Writer
Thursday, January 21, 2010; 7:29 PM

ELYRIA, OHIO -- The last time Barack Obama came to this struggling blue-collar city was during the 2008 presidential primary campaign, when he told workers at the National Gypsum drywall factory that if elected he would pursue a "job-creation agenda."

Now, as President Obama returns here Friday, the drywall plant is closed, its 58 jobs victims of a steep downturn in housing construction.

His day-long visit to the nation's withering manufacturing heartland is intended to show distressed and skeptical Americans that Obama is doing all he can to create jobs. For the president, this is an increasingly urgent mission, as the nation's anxiety around joblessness threatens to undercut his ambitious domestic agenda. There was more bad news Thursday as jobless claims unexpectedly spiked.

And a close look at Lorain County reveals the limits and unintended consequences of some of his signature policies. Those limitations underscore the difficulty even a president faces pushing against the hidden hand of the global economic marketplace.

The National Gypsum plant closed in May 2008, eight months before Obama moved into the White House. Pummeled by the housing downturn, the factory joined a decades-long exodus that has seen thousands of good jobs disappear at the heavy-manufacturing firms that once powered this region's economy.

In recent decades, one major company after another -- American Shipbuilding, U.S. Steel, Ford Motor -- has closed or severely cut its workforce in Lorain County. In some cases, production was moved overseas, or to non-union areas in the South, where labor is cheaper. Other times, firms were forced to fold in the face of foreign competition.

"I don't think we can replace the jobs that have left," said Michael Winiasz, president of Advanced Design Industries, a 40-year-old Lorain County firm that designs and builds custom machinery. "We decided 30 or 40 years ago to allow this migration of jobs. We have to do something to change that."

Officials here have fought back with one job creation idea after another. The unions and community college have spent millions in federal money retraining displaced workers. Firms willing to create jobs receive tax breaks.

The $787 billion economic stimulus plan enacted by Obama last February has brought at least $33 million to Lorain County. Among other things, the money has paid for youth summer jobs, Head Start slots, housing vouchers, road repairs, home weatherization projects and the transformation of a historic railroad station into a new transportation center.

Separately, German chemical giant BASF has won a $24 million Department of Energy grant to begin production here of a key component in the next-generation lithium-ion batteries that power hybrid and electric cars.

Local leaders have long promoted the idea of creating a wind farm on Lake Erie. Area workers in the underused plants that dot this region's landscape could manufacture turbines. Others could be trained to erect and service them. "That's what we're banking on. That's our game changer," said Lorain County Commissioner Ted Kalo.

But that idea is burdened by concerns about its economic viability, and the ability of the electrical grid to integrate huge amounts of wind power, making it appear years from fruition. In any case, many banks, still reeling from the financial crisis, are reluctant to fund such ventures.

So far, all of those plans and efforts have not been enough to alter the bleak employment picture.

Effect of auto bailouts

When candidate Obama visited Lorain County, the jobless rate here was 6.9 percent. By the time he took office, it was up to 7.9 percent. It reached a high of 11.5 percent last summer, before retreating to the current level of 9.5 percent.

The high jobless rate is hurting many businesses that have never quite recovered from the relentless wave of plant closures, feeding into a downward cycle.

Jim Bodnar, president of Market Square Home Furnishings, started in the waterbed business in 1975. He expanded into all manner of furniture, and eventually had three stores. But as the plants have closed, his business has dwindled. He once employed 16 people; now he has five workers. He once offered health-care coverage to them, but no longer.

The American-made furniture that once filled his showrooms has given way to products made in Vietnam, Indonesia and China. And the easy credit that for a long time propped up many of his customers is getting harder to come by.

"The last good run we had in my place was when the stimulus checks went out in 2008," Bodnar said. "People can't get financing right now."

It is a common complaint. Obama receive plaudits in this area for championing the controversial, multibillion-dollar bailouts of General Motors and Chrysler. The bailouts no doubt saved jobs across the country, but business people here say those efforts are being undercut by other forces.

Anthony B. Giardini, chairman of the Lorain County Democratic Party and a lawyer who represents auto dealers, said many domestic auto dealers are having trouble getting loans to finance their inventory. It is not that the banks don't have money, he said. It is just that they do not see American cars as a safe bet. "This is a problem," he said. "A huge problem."

The auto bailout itself was problematic, Giardini continued, as it led to the elimination of 1,900 General Motors and Chrysler dealers, including 120 in Ohio -- five in Lorain County. "That was a mistake the administration made thinking fewer dealers would help the manufacturers. It is just the opposite," Giardini said. "Multiply each of those dealerships by about 30, that's how many jobs you are talking about. Good jobs."

Overseas labor

Other job losses seem far beyond the president's ability to prevent. In nearby Brooklyn, Ohio, a garment factory that employs 300 union workers to make high-end Hugo Boss suits plans to close in April, likely moving to Eastern Europe where wages are lower.

"We are working hard, struggling to survive," said Wanda Navarro, 44, who has worked as the plant for 10 years and makes $11.85 an hour, plus benefits. "I don't know how I'll pay for my house if they go through with this."

As Obama discusses the nation's economy, he often stresses that expanding health-care coverage and educational opportunities, and embracing clean energy are all essential to job growth.

But in the short run, some of his policies could cost existing jobs, especially health-care reform if it is enacted. One of the few large businesses that has prospered in Lorain County in recent years has been Invacare, a maker of home medical devices, such as walkers and wheelchairs.

The company has 1,300 employees in Lorain County but has stopped hiring in anticipation of a tax on medical devices that was proposed to help pay for the president's health-care reform plan.

A. Malachi Mixon III, who led a group of investors who bought the company from Johnson & Johnson in 1979, said the tax would cost his business $15 million a year -- as much as he spends on research and development. If a tax were enacted, he said, he would seriously consider moving jobs to his factories in China and Mexico.

"I'm not making money in my Lorain plant now," said Mixon, who also has suspended contributions to the company 401(k), and frozen executive salaries in anticipation of the tax. That, in turn, has left many of his employees nervous.

"This tax will ultimately result in the loss of company revenue/profits, which will in turn, result in the loss of jobs for Invacare and Lorain County," read an e-mail sent to county Democratic Party officials in advance of Obama's visit by Joe Simonetti, who identified himself as a company employee. "I, personally, would rather pay more in taxes than to have Invacare pay the tax, just so I can keep my job."

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