A factory town's struggle against hard times

Justin Davis blames it on the economy.

Until recently, he had a $14-an-hour job as a welder at Vermeer, a farm-equipment producer that invented the "round bailer" for hay and cornstalks. Then the pink slips came - for him and 230 others.

"It doesn't surprise me all that much," says Mr. Davis, standing outside Vermeer's dozen red warehouses.

On a recent day, as a cold rain turns nearby cornfields to mud, Davis has come not to punch the clock, but to attend a job fair for the unemployed.

While the economic woes of high-tech firms have justifiably made headlines, the current slowdown is also marked by growing concern in factory towns like this one. Manufacturing, in fact, is one of the nation's hardest-hit sectors.

This is a time of testing for the so-called Rust Belt, the Midwest manufacturing region that got hammered in the 1980s. Now, with a more diverse and productive job base, the region could show a resiliency that would bode well for the whole country.

There's no denying, however, that the current downturn has been steep for the Midwest. "The region swings more cyclically than the overall economy," says William Testa, a regional economist for the Federal Reserve Bank of Chicago. "It's still more sensitive because of its reliance on durable goods."

Michigan, Indiana, and Ohio - perhaps the most vulnerable states of all - are feeling the effects of slower car sales, leading to less demand for parts and steel. As a result, once-abundant overtime hours are being cut, and inventory is backed up. Mortgages are no longer so easy to pay.

Worry is evident on faces here in Pella (pop. 9,825), where Vermeer's 2,600 workers make up almost half the industrial job base.

"It's always tough to hear about layoffs when it's a family-run business and the people losing their jobs are your friends and neighbors," says Karen Eischen of the town's chamber of commerce. "This was a major loss. But people are trying to help."

On the surface, at least, Iowa appears to be maintaining its economic health. State economists predict that growth will slow in the coming years but remain positive. Unemployment for January was just 2.5 percent, officials say, meaning that Davis and other workers who lost their jobs will have good likelihood of finding another - though they may have to settle for a lower wage.

Trucks still crisscross Interstate 80, and smoke still billows from the plants in southwest Cedar Rapids, where Quaker Oats has its headquarters. The farming sector is holding up, albeit with the help of government support payments. Land values are steady.

Indeed, Iowa has insulated itself from bad economic weather by diversifying and streamlining. The changes grew out of the 1980s recession, which lasted six years here, compared with about three in the rest of the US.

The state's newfound diversity can be seen in Pella. Even though Vermeer has fallen on tough times, other companies are there to pick up the slack. Pella Windows, one of the country's leading makers of wooden windows and doors, is expanding. So is the Maytag plant in nearby Newton.

There's also tourist money each spring. Some 50,000 visitors fill Pella's main square every May during a tulip festival that celebrates the Dutch heritage of many residents (members of the older generation can be heard slipping a sentence of Dutch into conversation).

The town has small technology companies, bed-and-breakfasts, and ethnic restaurants. The residents pride themselves on being entrepreneurs.

"People have been talking about the layoffs, but I heard that some of the them found new jobs already," says Mary Van Wyk, a local realtor - and optimist.

Ms. Van Wyk has worked the Pella housing market for the last 20 years. In 1995, she started her own company, Home Realty. Currently, a three-bedroom ranch house goes for about $130,000.

"I still feel real positive about the economy," she says. "Vermeer may have cut down, but they are still producing well."

Today's Iowa has benefited from a sharp knife and a touch of globalization. Financially weak firms have been eliminated. The survivors have learned to cut unnecessary management, to outsource more work, and to carefully control inventory.

Farm-equipment maker John Deere, for example, now has higher output with less than half the workers it had a decade ago, according to state economist Harvey Siegelman.

Education has improved, officials say, with local community colleges and industry collaborating to develop academic programs that dovetail with job needs.

"The Iowa economy looks a lot like the national economy," says Beth Ingram, a University of Iowa professor who chairs the state's economic forecast council. "There's a lot of information technologies, a lot of manufacturing, and less and less farming."

Still, at the Vermeer plant, surrounded by fields on the outskirts of town, a sense of gloom is palpable. One recently laid-off plant worker, who asked not to be identified, said he doubted he could find another job like the one he had at Vermeer.

"It was a good job," he said in a low, trembling voice. "I was lucky to have it." Unless he finds something soon, he says it will be impossible to support his three children.

Davis, the welder who recently lost his job, says he will be able to work elsewhere - there are always jobs available in telemarketing, for example. But he may have to relocate, and a new salary will probably be about $9 per hour. Significant overtime is unlikely.

"There's not much you can do with money like that," he says, before getting into his car and driving home from the job fair.

(c) Copyright 2001. The Christian Science Monitor