The Cities Main Street Feels the Pinch

By Janice Castro

Not long ago the bustling factory floor at the Black & Decker plant in Brockport, N.Y. (pop. 9,000), was the busiest spot in town. As many as 1,300 people worked there, making electric can openers and carving knives. Now a ghostly silence has fallen over the once humming machines. Black & Decker shifted much of the plant's production to other countries and suddenly closed the factory last Christmas. In one swift blow, Brockport lost its largest employer. About $4 million in severance pay has so far softened the impact on the community, but the money is fast running out. Says former Plant Manager Louis Reali: "If we don't get another company in here, the folks who used to work here are going to pack up and drift away. And then what have we got? Just an empty building and a town with no future."

Like Brockport, many towns and cities are suffering devastating setbacks as corporate America slims down. Of course, the purpose of restructuring is to make companies healthier and ensure their survival. The process can save thousands of jobs spread over many cities. But at the same time, inefficient and obsolete factories must often be shut down. In communities that have only a few dominant companies or industries, the consequences of such a plant closing can be wrenching. The impact ripples through every part of the society, from stores and schools to hospitals and the arts. Though towns hit by closings frequently attract new industry and grow healthier in the long run, the transitional phase is always stressful.

Flint, Mich. (pop. 144,000), some 50 miles north of Detroit, is a casualty of the foreign competition encircling American automakers. Nearly one-third of the work force in the area draws its pay from General Motors. But as part of a major reorganization plan, GM will close two Flint assembly plants this year and eliminate 10,000 local jobs by 1989. A study by the University of Michigan indicates that Flint's struggling service sector will not be able to create enough new jobs to make up for the GM cuts. Area unemployment, already 10%, is expected to rise to 13% by mid-1988. City Administrator Robert Collier says plant closings will depress local income tax revenues by about $1 million during the next year, while the school system will lose some $2 million in property taxes.

Restructuring can be almost a death notice for a one-company town. When New York City-based Phelps Dodge (1986 operating revenues: $846 million) decided to shut down its copper mine in Ajo, Ariz., in 1983 because of tough price competition from abroad, the community was transformed from a boomtown to a virtual ghost town overnight. More than 1,000 jobs disappeared with the closing of the mine, and Ajo's population dropped from 8,000 to 2,800. The town's hospital, which had been built by Phelps Dodge, closed for lack of use.

Sometimes a city is hurt when its leading company becomes embroiled in a takeover fight. As headquarters for Phillips Petroleum (1986 revenues: $10 billion), Bartlesville, Okla. (pop. 35,000), paid its own price after the eighth largest U.S. oil company fought off takeover raids by T. Boone Pickens Jr. in 1984 and by Carl Icahn the following year. Though Phillips kept its independence, it took on some $4.5 billion in new debts and was forced to shed $2 billion in assets in a subsequent reorganization. Partly as a result, Phillips employment in Bartlesville, which had peaked at 9,000 in 1981, was slashed to 5,000 workers. Local unemployment rose from 3.9% in 1984 to 6.7% last year.

Because most of the displaced employees chose early retirement and stayed in the area, the long-term impact of the Phillips cuts was not as damaging as it might have been. Still, most business leaders in town say their customers are more cautious spenders now. Observes David Oakley, president of Oakley Pontiac-Buick: "People are starting to hang on to cars a little longer. My new-car sales are off, but service is way up."

When a company is successfully taken over, its headquarters town becomes especially vulnerable. Blue Bell, the manufacturer of Wrangler jeans, shut down its Greensboro, N.C., headquarters after the company was acquired by VF Corp. That put 300 people out of work and meant the end of Blue Bell's strong support of Greensboro's arts and civic activities. Thirty miles to the west, Winston-Salem was dealt a similar blow after R.J. Reynolds merged with Nabisco Brands in 1985. Last month RJR Nabisco announced it will move its corporate headquarters from Winston-Salem to Atlanta, taking along not only some 250 jobs but the considerable corporate prestige and financial largesse that Reynolds had showered on its home city for more than a century.

But as serious as such setbacks are, they are rarely insuperable. A closing can ultimately prove beneficial if it spurs a town to diversify its economy and attract space-age industries to replace traditional ones. Brockport officials, for example, hope to lure a cluster of high-tech companies. As a drawing card, they point out that Rochester, with its universities and scientific companies like Eastman Kodak, is only 18 miles to the east of Brockport. As soon as Black & Decker finishes packing up its equipment, the village will be able to offer a large, modern industrial plant to interested companies, saving them the cost of building space. Bartlesville officials, meanwhile, hope that the city's large population of highly skilled early retirees may be able to establish some sophisticated consulting firms. Ajo has actually made a virtue of its trouble. Though it may never again be an industrial town, Ajo's Sunbelt location and ample supply of cheap housing have attracted hundreds of retirees. They say they appreciate the peace and quiet.

With reporting by Roger Franklin/Brockport and Lee Griggs/Bartlesville