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Area already feeling effects of GM announcement

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Stacy Vogel
October 14, 2008
— The news couldn't come at a worse time.

The national economy is in crisis. The housing market has collapsed.


Then came Monday's announcement—long expected but still unsettling for many—that General Motors will cease production of sport utility vehicles at its Janesville plant Dec. 23. The stoppage could eliminate 1,200 jobs at the plant and 500 or more jobs at local suppliers if GM decides not to retool the facility.


And if you're wondering when Janesville is going to feel the effects of the announcement, look around—it probably already is, experts said.


"You can already observe that people do feel the effects of (a plant closure), even when it's projected a year off," said Laura Dresser, labor economist at UW-Madison's Center on Wisconsin Strategy. "That already changes behavior."


Some of the effect could be psychological, experts said.


Janesville's future is uncertain, so plant families and even families unconnected to the plant already are changing their spending habits. Combine that with the state of the national economy, and it could mean bad news for the city's retail industry.


"I suspect this spring should be pretty rough for the retailers in the area," said Gary Green, professor with the UW Extension's Center for Community and Economic Development. "Maybe even for Christmas spending, people might pull back."


Residents probably will cut back most on big-ticket items such as appliances, he said.


It appears people already are cutting out the biggest-ticket item of all: new homes. Janesville issued just 88 construction permits for new, single-family homes between Jan. 1 and Sept. 30, 2008, said Vicky Miller, development specialist with the city. That's a 52 percent drop from the 185 permits the city issued during the same period in 2007.


A lot of the drop relates to the housing market collapse, but Miller believes some of it has to do with uncertainty surrounding the plant, she said.


The Rock County Job Center has been dealing with laid-off autoworkers since June, when GM ended its second shift in Janesville, eliminating hundreds of jobs at the plant and local suppliers.


The former plant workers have some time to decide what they will do—they'll earn up to 90 percent pay for nearly three years through unemployment insurance and union benefits. That's true of the workers who will be laid off in December, too.


But employees of suppliers such as Lear and LSI aren't so lucky, said Bob Borremans, executive director of the Southwest Wisconsin Workforce Development Board.


The board and other groups at the job center help laid-off workers with everything from skills training to resume assistance, Borremans said.


As the laid-off workers re-enter the job market, competition for jobs will become much tougher, Borremans said.


"What you've got is a lot of good, qualified people out there competing for a limited number of jobs," he said.


Plus, former GM workers probably won't find jobs that pay as much as they're used to, so they might take on second jobs or have stay-at-home spouses enter the workforce, putting further pressure on the market, Green said.


If the community doesn't offer new jobs for these people, they might have to move or commute to Madison, Rockford, Ill., or even Milwaukee.


"Relatively speaking, unemployment is relatively low, certainly in the Madison area. The question is whether their skills are going to match those jobs," Green said.


And even though the potential loss of GM might discourage some businesses from locating in Janesville, other businesses might see the plant's closure as an opportunity, experts said.


The job center has identified health care, transportation, distribution and utilities as industries with potential for growth in the Janesville area, Borremans said. The center is working with local technical colleges to help workers acquire the skills needed for those jobs.


Several experts mentioned green technology such as wind and solar energy as an industry ripe with potential in Rock County.


"Things like that would be very exciting opportunities for Janesville," Dresser said.



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