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Not just GM: Suppliers, rest of the local economy take hits

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FRANK J. SCHULTZ
April 29, 2008
— Who gets hurt when General Motors cuts hundreds of jobs? How does the job loss trickle down to retail, real estate and other parts of the local economy?

That’s hard to say because the local economy already is feeling the effects of higher gasoline and food prices, among other economic impacts, which muddies the picture, a local analyst said.


“Those are questions we can’t answer,” said James Otterstein, economic development manager for Rock County.


But one thing is certain: The workers who lose the jobs will feel the pain first, and perhaps they’ll feel it the longest.


“It’s going to have a tremendous impact,” said Mike Vaughn, shop chairman for the UAW Local 95 unit that represents workers at Lear Corp. in Janesville.


Lear supplies interiors and seat systems to the General Motors plant. Lear lost 90 jobs in March as GM slowed production, Vaughn said, and currently employs 680.


But when GM loses an entire production shift, Lear will have to do the same, because Lear’s production mirrors GM, Vaughn said.


Vaughn said he couldn’t immediately calculate exactly how many Lear jobs would be lost when GM goes to one shift on July 14.


Lear spokeswoman Andrea Puchalsky said the company would not comment on local impacts.


Vaughn said he expected that Lear workers with as many as 10 to 12 years of experience would lose their jobs. .


“It’s devastating,” Vaughn said.


And while GM workers who lose their jobs get Supplemental Unemployment Compensation, or SUB pay, Lear workers will get only the normal unemployment compensation, Vaughn said.


Laid-off Lear workers also will lose a good benefits package, Vaughn said.


“Our members go directly to the unemployment line, and that’s just a devastating economic blow,” he said.


Officials at other companies that supply parts or services to the GM plant, including LSI and Allied Automotive, could not be reached for comment.


GM estimated last fall that more than 1,000 people work in industries that supply the local plant. About 800 of those were at Lear. Another 100 were at LSI and 136 at Allied.


While losing hundreds of jobs will hurt, the local economy is much less dependent on GM than it was years ago, Otterstein said.


GM accounted for 10 percent of all the jobs in the county in the late 1970s, Otterstein said, but that share dropped to 4.5 percent by 2005.


“And given what’s gone on with the plant over the last 18 months, one could argue that that number has continued to shrink incrementally,” Otterstein said.


“I think the pain is still there, but the degree of sting is perhaps minimized a bit,” Otterstein said. “And not to make short of what these folks are going through, but from a sheer numbers standpoint, the pain is minimized compared to what it would have been 25 to 30 years ago.”


Otterstein noted that the county has gone through large job losses before, notably the closing of Beloit Corp. about eight years ago.


About 2,500 jobs were lost on both sides of the state line when Beloit Corp. went down, but many workers retrained, moved to find new jobs, started their own businesses or found their skills were needed in other local industries, Otterstein said.


Read more in our special section on the GM cutbacks.

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