The biggest job losses — and trauma — from the latest announcement involve three enormous assembly plants that, like the one in Janesville, have been central to their communities’ identities and labor markets. Oshawa, Ontario, has been a carmaking place for a century. The Detroit-Hamtramck plant has been the sole surviving General Motors assembly plant in the city that is home to GM’s headquarters. In Lordstown, Ohio, auto jobs offered a haven after the 1970s collapse of the steel industry in nearby Youngstown, which made the Mahoning Valley a symbol of the scars of deindustrialization.
Separated though they are by hundreds of miles and an international border, we know how the story for these places probably will go. The lessons from Janesville suggest that, even in a community with considerable social capital and a vehement will to recover, the demise of an auto assembly plant leaves deep bruises: a cascade of lost jobs, escalating tensions, families tumbling from the middle class. A full recovery is unlikely.
In each of the communities stung last week (there were five, including two smaller factories in Maryland and Michigan), the immediate shock among workers, their neighbors and their elected representatives was identical to its precursor in southern Wisconsin. Sens. Rob Portman (R) and Sherrod Brown (D) of Ohio voiced their bipartisan grievance; few events are as politically unifying as an industrial giant ripping out thousands of constituents’ well-paid jobs. But if Janesville is any guide, such an alliance will last only until it comes time to find realistic long-term solutions for the local economy.
As in Janesville, too, the effects of the assembly plants’ demise on these communities are certain to spread far beyond the loss of the GM jobs themselves — about 1,500 at Detroit, 1,400 at Lordstown and 2,500 at Oshawa, with salaried positions across General Motors making up the rest. Work at local suppliers will dry up. In Janesville, the assembly plant had been the only customer for a seat-making factory whose 800 workers lost their jobs in tandem with the GMers as successive shifts disappeared. And with GM and suppliers offering the best wages in town, their loss has had a particularly harsh effect on what economists call induced employment. Auto work at GM and nearby suppliers accounts for about 8,000 jobs in the four Ohio counties that draw workers to the Lordstown plant, and an equal number of local jobs are likely to vanish as a ripple effect of reduced spending power in the area, according to an analysis for The Washington Post by Susan Helper, an economics professor at Case Western Reserve University and former chief economist for the Commerce Department. That’s about 8 percent of the employment in those counties, Helper says.
The domino effects extend outside the auto industry and, if towns aren’t swift or lucky at rescuing themselves, can spiral a local economy down. “Businesses across the community suffer — not just suppliers or service providers who directly supported a closed plant, but also restaurants and bars and retailers of all kinds,” John Russo and Sherry Linkon, leaders in working-class studies who used to teach at Youngstown State University, wrote in CityLab. “Stores close, windows get broken, storefronts get boarded up, and downtowns empty out.” Even Janesville, which has been spared the worst, lost day-care centers because out-of-work parents no longer needed someone else to keep their kids. Bowling alleys suffered because people without incomes dropped out of leagues.
Recent research undercuts the traditional notion that, after an initial bad jolt, most communities and laid-off workers will regain their balance, with some in town winning restored jobs and wages and others moving to parts of the country where work is more plentiful. “It’s time to get real about the grittiness of adjustment,” Mark Muro, at the Brookings Institution’s Metropolitan Policy Program, has written in a review of literature showing that mobility has slowed and some labor markets, even two years ago, had not come back from the Great Recession. Other work has focused on lost earnings from mass layoffs, finding that, even in relatively mild downturns, men who lose a job end up with more than a year’s lower earnings over their lifetimes than if they had never been part of a large-scale employment casualty.
Janesville mounted tragically heroic efforts to prevent the plant’s closing, and GM itself laid the ground for more of this in its language Monday. A company statement said the three assembly plants will be “unallocated” in 2019 (meaning no product will be made there), but they will not be technically closed. Barra, the CEO, suggested that plans could shift as a result of GM-United Automobile Workers contract negotiations scheduled for next year. This same crevice of hope lingered in Janesville for years, at first as the state of Wisconsin, local governments, the union and members of Congress exhorted General Motors to give Janesville another product to make. They backed their lobbying with $195 million in economic incentives, plus more than $200 million in union concessions — the largest such package in Wisconsin history at the time — and were astonished when Michigan beat them out, offering five times as much in public funds. When GM opened a line in 2011 for its new subcompact, the Sonic, it was in Orion Township, north of Detroit. Expect the courting of GM this time to involve vast sums of public money and big worker concessions, including lower pay.
The GMers at the idled plants may live for a surprisingly long time in a state of denial. In Janesville, I attended a high school graduation in 2013 and was greeted by a GM retiree with two adult children who had lost their jobs when the plant shut down. He told me, 4 1/2
years after the last Tahoe, that it was just a matter of time until it reopened. This brand of denial was fueled in part by the fact that GM kept its Janesville plant in a limbo status called “standby” — eligible to spring back to life if market forces ever warranted it — until 2015, when the plant was permanently closed. In the initial reactions of workers in Oshawa, Detroit and Lordstown, I detected a familiar optimism. “Hopefully they will change their mind and give us a product,” Jess Adams, a 40-year GM Lordstown employee, told the Vindicator, Youngstown’s newspaper, the day he learned that his plant would shut down in March. “We’ve always survived before.”
Assuming that such hope proves hollow, as it did in Janesville, the GM workers in Ontario, Michigan and Ohio almost certainly will confront a wrenching choice. If they have enough seniority, they will have transfer rights to jobs at General Motors plants around the country whose assembly lines still are running. In Janesville, these transfers created a cadre of GM Gypsies, as they call themselves, who commute hundreds of miles, every week or every month, to prop up their families’ middle-class standard of living without moving away from the little city they love. For the rest, jobs that are available locally — even as unemployment is a fraction of the rate a decade ago — are not likely to come near the GM union top wage of $28 an hour or the benefits the company provides its workers.
Of course, the echo of this past week is not an identical match to its predecessor. In 2008, GM’s then-CEO, Rick Wagoner, announced the plant shutdowns seven months into the Great Recession, the nation’s worst economic crisis since the Great Depression of the 1930s. General Motors was so fragile that, despite nearly $20 million in federal loans during the initial crisis, the company filed for bankruptcy a year after it announced that Janesville and the three other plants would close. In contrast, this is the second-longest period of economic expansion in recorded history, and
Barra portrayed the decision as a preventive measure. “We are taking these actions now while the company and the economy are strong,” she told analysts on a conference call Monday, “to stay in front of a fast-changing market.” In this brighter economic context, plant closings can be seen not as the survival strategy they were a decade ago but a gift to GM’s investors. The company’s shares shot up by nearly 8 percent just after Monday’s announcement.
And the vehicles being made at the targeted plants represent the flip side of the auto industry’s market a decade ago. Janesville was assembling full-size SUVs that no longer sold, as gas prices had surpassed $4 a gallon. The other three plants then were manufacturing trucks. A decade later, the small cars that GM had envisioned as its salvation are now on the chopping block as trucks and SUVs dominate showrooms. Lordstown manufactures the Chevy Cruze, a compact that the company introduced in 2008. In a cruel irony, Lordstown was the final transfer offer for Janesville’s laid-off GMers.
But a truth overshadows these differences: Deindustrialization continues its march, with the initial trauma and disbelief — even at plants that had been hemorrhaging shifts and workers — destined to give way to a prolonged slide downhill. Nine years after the last Tahoe came off Janesville’s assembly line, GM sold the dead plant to a St. Louis-based company specializing in distressed industrial properties. The new owner, Commercial Development Co., began to demolish it in April. The fervent hope in town is that new companies — perhaps distribution centers that pay far less than auto jobs — will buy up parcels of the enormous tract. It’s what passes for a best-case scenario.