Factory Town Broods Over Economic Slowdown

C O L U M B U S, Ind., Feb. 16, 2001 -- In places like Skooter's Family Restaurant, amid the smell of cigarette smoke and bottomless cups of coffee, thoughts of an economic slowdown churn like an empty stomach.

Factory workers belly up to the counter for casual conversation,but in the back of many minds, from this diner to kitchen tables togas pumps and grocery store aisles across the Midwest, there'sconcern. Concern that a job may be gone tomorrow. Concern that thegood times may be winding down.

Just up the road from Skooter's, good-paying factory jobs arebeing cut at Cummins Inc. and ArvinMeritor Inc. The layoffs haven'tput much strain on the community yet, but it's enough to slow homesales, make smokeshop customers buy a handful of cigars instead ofa box, push couples to forgo their Friday night dinners out.

"Everybody's worried," said Dave Skinner, who's worked onengine blocks at Cummins for 40 years. "People that've been on thejob for 30 years are worried."

And with good reason. After years of booming economic times,sales of automobiles and other durable goods are falling, and theparts makers in the so-called Rust Belt region of the Midwest areseeing business drop.

Durable Goods Purchases First to Go

When the economy hits a bump, manufacturing states are the firstto get bounced. When budgets get tight, consumers start to pass up the durable goods that are this region's bread and butter.

"You don't have to buy a new refrigerator, you don't have tobuy a new washing machine, you don't have to buy a new car," saidMorton Marcus, an economist at Indiana University. "You canpostpone these things."

Over the past five months, layoff announcements at manufacturingplants have popped up across Indiana and surrounding states: DanaCorp. cut about 1,000 jobs in Fort Wayne. Similar numbers were lostat Outboard Marine Corp. in Waukegan, Ill., and at differentfactories in Cadillac, Mich. In Ohio, more than 20,000 workers havebeen laid off since Jan. 1, 2000.

Marcus contends that one of the key elements to the currenteconomic slowdown, particularly in the Midwest, is the skyrocketingnatural gas bills people are facing during a bitterly cold winter.

"That's the thing that's really eating it up for consumers herein the Midwest," he said. "You've got to pay that gas bill beforeyou can think about taking on new payments for a car."

In Columbus, fuel costs in general, coupled with the threat oflayoffs, have forced Carol Petro's family to tighten its belt. Asshe rolled a rattling shopping cart from a LoBill grocery store toher car, Petro explained that her husband has been with Cummins fornearly 28 years. He needs 30 years service to retire with companybenefits.

"And he's worried about not making it," she said.

The tan plastic grocery bags she loaded into her trunk heldstaples: potatoes, pasta, tomato sauce. Absent are the cookies,candy and other assorted junk food. "Treats," she calls them. Tobe cautious the family has cut back on groceries and dinners out,and they try to drive less to save money on gas.

"It's real scary," Petro said. "It's real scary when youdon't know what's going to happen."

When Cummins Sneezes, Columbus Catches Cold

In this south-central Indiana city of 37,000, called The Athensof the Prairie for its historic buildings and unique architecture,Cummins has always been a rock. There was a time when working atCummins was a status symbol, and, though Columbus now has numerousmanufacturing plants, the diesel-engine maker remains one of thebest paying at an average of $17 to $20 an hour.

"Every time Cummins sneezes, Columbus catches a cold," saidM.E. "Shorty" Prather, owner of Shorty's restaurant, located astone's throw from the plant. "The whole economy of Columbus isbased on the wages at Cummins."

Prather started his restaurant 55 years ago with only $2.28 inthe bank. He's now financially sound, owns several hard-to-findmotorcycles and boasts a statewide reputation for the finesthand-breaded pork tenderloins.

"Everything I own today came from there," he said, pointingacross the street to the Cummins plant, which puts countless lunchpatrons in line for sandwiches, green beans and mashed potatoes.

For the sake of business, and the people who've always supportedhim, Prather prays this slowdown ends soon.

So does Gary Snow, a manager at Cummins. After enjoying one ofShorty's tenderloins, Snow said production workers aren't the onlyones worried about their jobs.

"I wouldn't run out and buy a new car today, or make any largepurchases," he said. "I usually take a cruise each year, but Idoubt I'll take one this year."

The 'Good Run' Is Over

For management, Snow said, stress also stems from having towatch others get laid off, or having to decide where cuts can bemade.

Joe Magliochetti, chairman of auto-parts supplier Dana Corp. inToledo, Ohio, agrees.

"Each one of these individuals represents a family, withobligations that we all have in our communities, in our church andour schools, et cetera," he said. "You're torn between theimportance of the job to the company, the importance to theemployee and the importance to the shareholders."

Making it worse is the fact that the industry is coming off sucha long stretch of prosperous times.

"It's been a good run," Magliochetti said. "I think this hasbeen an unprecedented seven- or eight-year cycle."

But that cycle has wound down and Dana has had to lay off about10,000 of its 75,000 employees, and close 11 facilities worldwide.

"The fact of the matter is if you're servicing a cyclicalcustomer, you end up being part of that cycle," Magliochetti said.

Many, including Magliochetti, don't believe this downturn willbe long lived. But in January, manufacturing activity nationwidefell to its lowest level in 10 years, and companies are continuingto cut work forces to handle an economy that has obviously sloweddown.

That leaves the looming question in the minds of mothers,fathers, managers and economists: How bad will things get?

"I think part of that depends on the weather forecast," Marcussaid. "Part of it's going to depend on what's going to happen toenergy prices this summer. All of these things are related to thequestion of which bills must the consumer pay first?"

Until that question becomes clearer, people like Cummins'Skinner and Snow, and residents in Columbus and across the regionwill move cautiously.

"It's having an impact mentally on us," Snow said. "Where isthis thing going, and how serious is it?"