The Atlanta Journal-Constitution, January 24, 2006, Tuesday

Copyright 2006 The Atlanta Journal-Constitution
The Atlanta Journal-Constitution

January 24, 2006 Tuesday
Home Edition


SECTION: BUSINESS; Pg. 1D

LENGTH: 744 words

HEADLINE: CLOSING OF FORD'S HAPEVILLE PLANT: Job losses hit fragile metro economy

BYLINE: MICHAEL E. KANELL

BODY:
The shutdown of the Ford plant in Hapeville deals another blow to a metro At-lanta economy struggling to regain traction after years of recession and lack-luster growth.
By itself, shuttering of the Ford assembly line would be a modest drag if the metro Atlanta economy of more than 2 million jobs were growing rapidly. However, the region's job growth has been sluggish, and the last few months have seen a series of discouraging stories about Atlanta companies.
The sale of Georgia-Pacific and Scientific-Atlanta. More cuts at BellSouth. The bankruptcy of Delta Air Lines.
Now comes the Ford plant closing. The disappearance of 2,100 Hapeville jobs will hurt, said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.
"These are high-paying jobs," he said. "Typically, each manufacturing job supports one-and-a-half or two other jobs. And this is another blow to manufac-turing here."
The losses go beyond the jobs at Hapeville. A manufacturing company often de-pends on a network of suppliers that bring materials to the plant. The factory also pumps money into the local economy for everything from janitorial help to road paving.
Even more important is the payroll. Consumers account for about 70 percent of the economy, and money paid to local residents is mostly spent here. Manufactur-ing paychecks in general average about $50,000 a year, and Dhawan estimates the Hapeville workers as a group are paid more than $100 million a year.
Large severance packages and a long period of continued benefits at Hapeville are likely and should soften any impact, he said. "If people are getting most of their pay, there isn't that much impact on spending patterns. But when the money runs out, that is when the real ripple effects run through the economy."
Yet most economic analysis underestimates the damage, argued Kate Bronfen-brenner, director of Labor Education Research at Cornell University in Ithaca, N.Y.
Much of the harm flows from a toxic blend of financial stress and mental pain, she said. "We've seen spirals in divorce, in spousal abuse and child abuse. The fabric that makes families and communities starts to tear. Only some of that is in dollars."
Hapeville is, in some ways, just a footnote in the elongated decline of manu-facturing, automaking and high-paying blue-collar work. When the United States dominated the world economy after World War II, manufacturing accounted for about one in three jobs.
Today, that figure is closer to one in eight --- and falling. In Georgia, manufacturing has plunged from 587,604 workers in 1995 to about 441,300, even while population soared.
Most economists call the process natural, a shift that lets poorer nations sell what they have in abundance: cheap labor. In contrast, economists argue, the United States moves to "higher value" goods and services, from jet planes to Hollywood movies.
It is not an argument that convinces everyone.
Whether Ford admits it or not, Hapeville is a victim of globalization, Bron-fenbrenner said.
"Ford is going to be making cars. They are just not going to be making them in the United States. This is not a U.S. story. It's a story of the race to the bottom. Companies are looking to make things in the cheapest way possible."
Most economists argue that, on balance, the U.S. benefits. American consumers get cheaper products.
But the nation also is losing its economic engine, Bronfenbrenner argued. "When people talk about the end of the manufacturing era, they forget that mak-ing things is what makes an economy work."
There is hope that at least some laid-off autoworkers can stay in the indus-try. Thousands of auto jobs have been added by foreign automakers like BMW in South Carolina, and Mercedes and Honda in Alabama. Though nonunion and generally less lucrative than the GM and Ford lines, they still pay far better than most jobs.
But there aren't enough of them to soak up all the laid-off assembly line workers --- people with experience and a proven work ethic.
"For a plant closing of this magnitude, the overall impact is somewhere be-tween traumatic and devastating," said labor economist Harley Shaiken of the University of California at Berkeley.
"Unless the workers are just about ready to retire, it is very unlikely that they will end up with anything like the income they had," he said.
"The general rule of thumb is that they'll get one-half to two-thirds of their pay and benefits --- and it will likely take a long time to be re-employed."