Automakers' bailout or not, Kokomo, Ind., fears end of era

KOKOMO, Ind. -- Ever since Elwood Haynes revved his horseless carriage up to 7 mph on the Pumpkinvine Pike in 1894, this has been a car town. It calls itself "City of Firsts," site of the first American gas-powered car, the first carburetor, the first pneumatic tire, the first push-button car radio.

Two decades ago, local auto plants employed more than 20,000 workers, and Chrysler and the parts maker Delphi still account for 20% of all local jobs.

But now, as Washington argues whether to give automakers just enough money to limp into the new year, a growing number of people here feel that the car, which took Kokomo so far for so long, has turned into a dead end.

Dependent on two financially troubled employers, the city now seems as vulnerable to catastrophe as any hurricane-prone coastline.

Mayor Greg Goodnight says the city has a "contingency plan." He won't go into detail — "it's an internal document" — but says it would respond to a plant closing almost as if it were a natural disaster.

"Our entire community is tied to this industry," says Edward Vasicek, a minister who writes an opinion column in the local newspaper. "If those plants close, you might as well plow everything over and return to farmland. What if even one of them fails? Could we survive?"

No one can say. There's a sense here the auto industry's fate will not be resolved cleanly or quickly — that Kokomo will twist in the wind well into next year. And even if the government does give Detroit more money, the probable result will be a shrunken industry carrying fewer local jobs.

Kokomo is a metro area of about 100,000 on the Plains 45 miles north of Indianapolis. Its cityscape is marked by the long, low profiles of sprawling factory complexes that employ more than 8,000 autoworkers — one-tenth of the state's total — and support a range of suppliers and other businesses.

During the past decade the city has lost jobs at a rate of 1,000 a year, says Jason VanAlstine, who teaches economics at the Indiana University campus here. Unemployment hovers from 7% to 9%, compared with the state's overall rate of 6.4%.

Kokomo is one of many such embattled car towns in the Midwest. From Chrysler's vast minivan-and-truck complex in Fenton, Mo., to General Motors' plant alongside I-80 in Lordstown, Ohio, the decline of a unionized industry that helped create the American middle class threatens a way of life.

"These towns are scared," says Kim Hill of the Center for Automotive Research, an industry think tank. "There's a desire to diversify, but there's also the attitude that we've always been an automotive community. That's what we know."

A motor city

Elwood Haynes was a schoolteacher turned inventor who dubbed his gas-powered vehicle "The Pioneer." He was one himself, part of a group of visionaries, tinkerers, lab rats and oddballs who gathered in places such as Detroit and Kokomo to found one of the world's greatest industries.

Whether his was really the first U.S. car remains in question — there are equally compelling claims for the Duryea brothers of Springfield, Mass. But after he joined with two local mechanics to found the Haynes-Apperson Automobile Co. in 1898, Kokomo's industrial fate was sealed.

Haynes-Apperson was one of about 2,000 U.S. auto companies, but it closed in 1925, unable to match the production or marketing techniques of men such as Henry Ford and Walter Chrysler. A few years later, Chrysler built a big assembly line on the site of Haynes' factory.

Today, Chrysler is one of three survivors of the 2,000. People in Kokomo wonder for how long.

Last week, people who never watch C-SPAN spent hours tuned to the congressional hearings on a proposed bailout, rooting for the Big Three and the United Auto Workers union as if they were the beloved Indianapolis Colts. "First time I ever watched that channel without falling asleep," smiled Rick Davidson, a retired financial adviser. All around town, from the plant floor to Starbucks, scenarios are spun out, debated and debunked. What if GM merges with Chrysler? What if Chrysler is sold to Nissan? What if Chrysler folds?

"When you get to work, it's, 'What'd you hear today?' We try to guess what's gonna happen," says Terri Mutran, 47, a quality-control worker who has 14 years at Chrysler's transmission plant.

People once secure in Kokomo's auto-born prosperity are cutting back. Some are pawning valuables, selling blood or attending high school games and performances for discount entertainment. Last weekend an annual televised auction to benefit several local charities raised $191,000, compared with $318,000 in 2007. "You can feel the belt-tightening," says David Galvin, a mayoral aide.

Vasicek, the minister, says some of his parishioners complain of insomnia. Even he is worried. Although the church is in good shape financially, he wonders what would happen to contributions if one of the plants went down. He works for God, he says, "but in a way we all work for the car companies."

It would be nice if Komoko diversified, but "that's easier said than done," VanAlstine says. For one thing, companies scouting new business locations tend to regard union towns skeptically.

Some people feel helpless, as if no matter what they do — how hard they work, how many times they write their Congress members — they can't control their fate. VanAlstine says layoffs over the past few years have produced a pessimism bordering on defeatism about the auto industry: "People have the sense that if this goes one way, it'll turn out badly, and if it goes another way, it'll also turn out badly." So some are changing direction.

Applications at Ivy Tech Community College are up 26% this fall. Susan Maxson, an administrator, says many applicants are autoworkers or former autoworkers scared into seeking "the college education they thought they'd never need."

They include Penny Wisler, 47, and son Eric Dockery, 28. She hopes to become a surgical technician; he'll study automotive technology to learn to fix cars.

Two years ago, they were delighted when, with the help of referrals from autoworker relatives, they landed jobs at the Delphi auto parts plant. She made hybrid batteries; he worked in shipping and receiving. They expected to retire from the plant.

But in October, they each accepted $40,000 buyouts from Delphi, which filed for bankruptcy in 2005 and has yet to emerge.

Temporary layoffs were always part of auto factory work, but this was different. "They told me, 'You better take the money, 'cause you're not gonna get called back,' " Eric says. "You knew your head was on the cuttin' block."

And he knew why. On shift after shift, he says, he'd loaded equipment from the Delphi assembly line onto trucks headed for another plant in Mexico.

A new attitude

Bumper stickers here once read "Hungry? Eat your import!" Today, some in Kokomo openly oppose a government bailout.

Peter Heck, 29, is a high school history teacher and conservative radio talk-show host who believes federal aid for Detroit is throwing good money after bad. "I hate to say it," he says, "but those companies have to suffer the consequences. A market without failure is no market at all." He's torn because many of his students' parents and fellow church members work for Chrysler or Delphi. But he hasn't gotten any hate mail.

Steve Cox, who teaches finance and accounting at Indiana University-Kokomo, was surprised recently when he organized a class debate on the bailout and its opponents won easily.

Cox says most students lack sympathy for blue-collar autoworkers, an attitude he summarizes as, "You can't expect to make $65,000 for a job you can learn in a month."

Out of such angst has arisen an unconventional idea: Kokomo, about as industrial and self-contained as a place can get, can reinvent itself as a "green city … the city of the future" — and maybe a quasi-suburb of Indianapolis.

These ideas come not from some crackpot but from Mayor Goodnight. He talks of attracting wind power and hybrid technology companies and of improving transportation links to metro Indianapolis, whose north side is booming. "We want to ride the auto industry as long as we can," he says. "But we also want to diversify."

'We're hoarding our money'

The Durhams are a UAW family. Mike, 41, is a fourth-generation autoworker; his wife, Tina, 37, is second-generation. They met at Chrysler and now have three children. Their commute to the plant from their spacious ranch house takes three minutes. He drives a Dodge Ram pickup; she, a Dodge Durango. Both get about 12 miles a gallon. "You gotta drive what you make," Mike Durham says.

They are worried. They see people like them, with 15 years at Chrysler, taking $100,000 buyouts rather than sticking it out. "With two Chrysler incomes, money was never an issue," Tina Durham says. But now, "People say, 'You have all your eggs in one basket!' "

So, she says, "We're hoarding our money." The whole family used to eat out five times a week; now, Tina and Mike go out once a week, alone. Tina buys generic brands and has cut back on sweets and snacks. In the past, the family took several vacations; next year, they'll take one. This Christmas they plan to spend half what they spent last year.

They feel that many Americans don't understand or appreciate the auto industry and its workers. "Congress gave money to the Wall Street bankers, so why not automobile factory workers?" Tina asks. She particularly resents criticism of Detroit's big cars: "I like my Durango. I feel safe, and I need room for the kids and their equipment."

Even in Kokomo, Mike figures a bailout is supported only by a slim majority, 60% at most. He suspects many are jealous of autoworkers' wages and benefits: "A lot of people think we're undereducated and overpaid."

The conversation around their dining room table stops when Mike and Tina are asked what they'd do if the plant closed. Mike, No. 1,023 in seniority, is stumped. "Wow," he says, rubbing his chin. "That's a tough call. Wow. Well … "

"We don't even talk about it," Tina says. But she's not worried. She's been active in the union, and earned a degree in organizational leadership from Purdue University's Kokomo program. She says she could make it in health care or a number of fields: "I'd hit the ground running."

Their 12-year-old son, Michael, is asked if he's going to be an autoworker, extending the streak to a fifth generation.

He shakes his head. "I'm going to run for political office," he says, decisively. "There's always going to be a government."