Factory towns still shed jobs

In Mississippi River communities, uptick in economy doesn't stop tide of layoffs.

Five blocks south of the village hall in Roxana, Ill., Route 111 stretches into a neat dividing line. On one side, one of the nation's oldest refineries (now owned by Phillips 66) produces some 300,000 barrels of oil products a day. "Our operation is steady," says a company spokeswoman.

But on the other side, the smaller Premcor refinery is slated to close. Headquarters has decided it's not worth upgrading the plant to meet federal clean-air laws.

The closure threatens the plant's hometown of Hartford. Worse, it follows a string of closings reverberating throughout the industrial southern Illinois communities that lie across the Mississippi River from St. Louis.

The fortunes of the two plants tell a story of how the revival of the American economy, now widely acknowledged to be under way, is far from uniform or robust across the nation's manufacturing belt. It also points to larger forces at work that are changing the very culture of small towns in the Midwest that often have known only one kind of job since early this century.

"We've literally lost thousands of manufacturing jobs over the last couple of years," says Jim Pennekamp of the Leadership Council Southwestern Illinois, the regional economic development group. "What you're looking at nationally is something as big as the Industrial Revolution."

While evidence certainly exists here that the economy is beginning to turn around – production is up, orders are starting to roll in – many plants are still closing, still pushing workers into unemployment lines. Some of those factories and jobs will never come back. Their disappearance is forcing blue-collar communities to cut teachers, curtail city services, and dip into their reserves.

Although the shift from manufacturing to services looks natural, even inevitable, on the national level, it looks far tougher and grittier in the communities struggling to make the transition.

Indeed, just as factories pulled more workers out of agriculture a century ago, the service sector is grabbing a larger share of the economy today. The growth of services is not only dwarfing manufacturing's share of the work force (now at under 14 percent, a low not seen for more than a century). It has also reduced the actual number of factory jobs to 17.7 million workers last year, the lowest total since 1964.

Impact on a local school

Locally, Larry Busch, superintendent of Wood River-Hartford school district, ticks off the plants that have closed. In the past year alone, southwestern Illinois has lost a steel plant (550 jobs) and a brass smelter (150 jobs). One week after Premcor announced it would shutter its refinery here in Hartford (300-plus jobs), National Steel filed for bankruptcy, endangering the 2,700 workers at its plant in Granite City, Ill.

He doesn't mention smaller plants that have downsized, such as a container-making facility (more than 80 jobs lost) in Godfrey, Ill., to the north. All the shrinkage is affecting town finances and school budgets. Even before the Premcor announcement, Superintendent Busch was facing a possible $200,000 loss in state aid for the coming year.

If the Premcor plant closes, the district could lose more than $300,000 or about 5 percent of its budget because of lost property taxes. The last time the schools faced such a crunch, when the local Amoco refinery closed in the mid-1990s, the district had to increase class sizes and let three of its 51 teachers go. The manufacturing decline has changed the relationship between companies and communities.

"There was a time that major industry and big-money people would come into a community and they wanted to know: 'What can we do to make that community better?' " Mr. Busch says. "Today, whether we're talking about an oil refinery or a clean industry, like a software distribution center or a baseball team, it's: 'What can you give us to encourage us to stay here?' "

Some optimism

Despite the gloom, residents of Hartford have not given up hope. There's talk of Phillips buying some or all of the Premcor plant across the street. "If they shut down, I am sure someone is going to pick it up," says Virginia Downer, Hartford's budget officer, sitting in the newly remodeled village hall, which still smells of fresh paint and new carpeting.

Nevertheless, the loss of Premcor, Hartford's largest taxpayer, could mean the loss of up to a quarter of its budget, she estimates. The village has already put a stop to sewer work and other projects. If no new business comes in, the village's reserves could tide the community over for two years, she adds.

By that time, nearby Granite City should know the fate of its far larger steel plant, which has been in operation for 124 years.

Steel imports have decimated the domestic industry, forcing dozens of producers into bankruptcy and causing even the free-trade-minded Bush administration to announce new measures to stem the imports.

Ironically, National Steel filed for bankruptcy the day after the president's announcement. So far, operations continue as normal. The company believes it can compete if the bankruptcy court allows it to restructure its debts, says Anita-Marie Hill, a company spokeswoman. Others aren't quite so sanguine. "This industry is in a life and death situation," says Dave Dowling, a local official with the United Steelworkers of America. "We may not have this industry in the next few years."

New hope: full tourist buses

Even if it stays, no one expects the region's manufacturing jobs to tick upward. "If we're looking for future job growth in southwestern Illinois, we're going to be looking at different sectors" than manufacturing, says Mr. Pennekamp. His regional development group is focusing on information technology. The American Water Works Company, a big national utility, recently decided to locate a national call center in the area.

Even here in Hartford, where Premcor represents 20 percent of his business, local restaurateur Bob Dannenberg envisions a shift from the village's industrial past. He shows off plans to expand his three-table rib house into a 60-seat facility capable of handling tour buses. Why would they come? Tourism, he says.

The new Lewis & Clark Interpretive Center down the road is expected to open in time to commemorate the bicentennial of the famous explorers' 1804 launch from the area.

"That could cause my business to mushroom," he says.

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