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UW Election Eye 2012

Campaign 2012 through the eyes of UW faculty and students

May 25, 2012 at 2:22 PM

Two Midwest tales of weathering the Great American Recession

UW Election Eye is on the road for three weeks, covering politics in the heartland of America. One of our points of focus is Wisconsin, where voters will decide on June 5 whether to recall their governor. A big issue there, like everywhere, is the economy. Here’s two towns that have different, yet both challenging, tales.

A tumble weed is the only sign of movement you would expect to see at the General Motors Janesville Assembly in Janesville, Wisc. The factory closed its doors in June 2008 and is in standby until its fate will be reconsidered in 2015. (Allison Int-Hout/UW Election Eye)

ON THE ROAD IN WISCONSIN — A total of 49 miles apart in this state anchoring the upper Midwest, Janesville and Middleton tell two very different stories of how some towns in America are weathering the Great Recession. They represent economic turmoil on one hand and prosperity on the other.

Their experiences point to the issue that hangs over all of American politics like a cloud this election season: jobs. It’s certainly front and center as Wisconsites consider whether to oust Governor Scott Walker in a recall election on June 5. And it is jobs that will go far to determine the fate of many other elections in November.

From Puget Sound to Lake Michigan and beyond, it’s on everyone’s mind, even those who are doing relatively well.

We did not need to drive far into Janesville yesterday to see the 64,000-person town’s recent struggles. For-sale signs decorated one large part of town more frequently than groomed lawns and flower beds, and many of the houses were years past due of a new paint job.

The biggest evidence of Janesville’s struggle, though, is a deserted, 4.8-million-square-foot General Motors factory that closed in 2007.

The GM Janesville Assembly gradually shut down from 2007 to 2009, laying off about 1,200 workers during the process. In addition, the closure led companies that supported GM to vacate 1.2 million square feet of industrial space that they occupied. Now, GM’s deserted property is on “standby” – overgrown and largely emptied of all equipment, and reopening the facility will be back on the table in 2015.

Janesville’s unemployment rates reflect how the factory’s shut down hit the community. From 2006 to 2008, before the GM plant closed, unemployment in Janesville fluctuated between about 4.5% and 7%, while the state average was about 5% at the time, according to the Bureau of Labor Statistics. By March 2009, Janesville’s unemployment rate skyrocketed to 13.9%, far above the state average of roughly 8%.

The principal employer in Janesville is Mercy Health System, a health system with 68 facilities in southern Wisconsin and northern Illinois and employs almost 4,000 people in Janesville. Other large employers include Wal-Mart and Sam’s Club, the county and local school district, and Blain’s Farm and Fleet, a chain discount store that sells agricultural supplies and equipment.

By the end of last year, the unemployment rate was down to 8.4% in Janesville, but skipped back up to 9.2% in March. Vic Grassman, the Economic Development Director of Janesville, believes this recent unemployment rate increase is a good thing – a sign that more people are jumping back into the work force.

Residents of Janesville have good reason for anticipating a turnaround in their town’s job market. According to Grassman, since the GM plant closed, the city has expanded its economic development program to absorb the industrial space left vacant by supporters of GM, and the city is pursuing a number of relationships with medical diagnostic companies. Shine Medical Technologies has already signed on and will open an isotope manufacturing facility in Janesville in 2015.

“We’re looking at a lot of non-traditional and traditional ways to grow our existing businesses and attract (more),” Grassman said. And as far as GM’s leaving Janesville, Grassman had this to say: “We’ve moved on.”

Middleton’s experience in recent years has been far different.

Potted plants, benches and other outdoor seating lines the sidewalks in quaint Middleton, Wisc. (Photo courtesy of the Middleton Chamber of Commerce)

The quaint town’s sidewalks are scattered with pots of flowering plants and downtown, there isn’t an empty office space in sight. Some of the major industries in Middleton are biotech, pharmaceuticals, medical research and agri-business. It was this small-town, small-business environment that allowed Middleton, population 17,000, to experience the recession in a unique way.

“Middleton and a number of the other surrounding communities do not have one specific employer that dominates the employment scene,” said Van Nutt, the Executive Director at the Middleton Chamber of Commerce. “Our largest employers might have 600 to 1,000 employees, so if any one of them goes away, it doesn’t kill the community. And in Janesville, that’s a lot of jobs lost with GM, and then the suppliers to GM.”

So instead of combating the recession by shutting their doors, like industry-giant GM chose to do at the nearby Janesville factory, smaller Middleton business owners got creative.

Middleton's downtown is designed for tourists, with navigational signs like these and even a National Mustard Museum. (Photo courtesy of the Middleton Chamber of Commerce)

“When your market starts to deteriorate or slows, you have to cut back or you have to find other ways to keep your people employed. Creativity is critical to that,” Nutt said.

One Middleton business that adapted to the slow economic times is ETC (Electronic Theatre Controls) which manufactures equipment for entertainment and architectural lighting and rigging systems. Fred Foster, the CEO of ETC, said that the company made strategic moves when the recession hit, like continuing to invest in product development and expanding their manufacturing to include stage machinery. Their biggest priority was to their employees – exactly what gave them an advantage once the economy started to improve.

“Looking back at it, this positioned us really well to come out of the market downtrends because our competition joined the crowd; they used the recession as a get-out-of jail-free card to lay people off and rid themselves of the people that helped build their companies,” Foster said.

It has not been an easy road, though, even in Middleton.

“People have hung in there,” Nutt said about his city’s businesses. “We haven’t seen nearly as much pain here as other areas.”

Comments | Topics: Economy, General Motors, Janesville


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