Arkansas town braces as Whirlpool shuts big plant

Reuters News
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Posted: Oct 31, 2011 4:49 PM
Arkansas town braces as Whirlpool shuts big plant

By Suzi Parker

FORT SMITH, Ark (Reuters) - Eleanor Roller and her husband Bob say they opened their 24-hour diner 'Bob and Ellie's' ten years ago a stone's throw from the big Whirlpool plant because a good piece of property was for sale.

But the closeness to thousands of round-the-clock manufacturing workers at Whirlpool certainly didn't hurt.

"Whirlpool used to have two and three shifts," Roller said in an interview. "But then they only had one, with no lunch break. So we felt that."

They felt it even more last week. Whirlpool, the world's largest manufacturer of household appliances, said that it would close its Fort Smith plant by mid-2012.

The plant, the biggest in the city of 86,200, employed 4,600 people as recently as 2004. But Whirlpool has down-sized steadily since then, with the final shuttering to eliminate 90 salaried and 884 hourly employees.

"Given the weakening global economic environment, we are today announcing aggressive plans that will result in substantial cost and capacity reductions," Whirlpool's chief executive Jeff Fettig said in a statement on Friday.

The job cuts are among 5,000 positions -- one in 10 in North America and Europe -- cut by Whirlpool, which employs 71,000 people around the world.

Fort Smith city leaders and residents absorbed the news with grit and promises to stick together as a community, but also with resignation and frustration more than anger.

"It's a convergence of economic factors peaking at the wrong time," said Ray Gosack, the city's administrator.

Whirlpool said the plant's remaining production, mainly side-by-side refrigerators, would be taken over by a plant in Ramos Arizpe, Mexico. But Gosack said consumer demand for those refrigerators was weak and he expected them to be phased out completely before long.

Such commercial logic was harder to cope with for people like Roller, who is near retirement age and says thinking of a new career won't help. Rising food costs, the bad economy and the Whirlpool news have just made her weary, she said.

"It's my regulars I depend on and hopefully they'll keep coming," she said. "The last three years have been the worst. I can't raise the menu prices because people can't afford to eat out now. Sometimes, it's like beating your head against the wall."

CLINGING TO HOPES

Fort Smith, the state's second largest city, is still home to several manufacturers including Baldor Electric Motors, Gerber Products, Hiram Walker, Kraft Foods, Rheem Manufacturing and Mars Petcare.

As Whirlpool downsized in recent years, the city also wooed several non-manufacturing businesses. Sykes Enterprises recently opened a call center that employees 500 people. Golden Living, a healthcare company, plans to add 200 jobs. Mitsubishi Power Systems will bring another 300.

But Fort Smith, once considered the state's manufacturing capital, has lost 33 percent of its manufacturing jobs in the last 10 years, Gosack said.

The local unemployment rate is 7.9 percent compared to the national average of 9.1 percent. But city leaders don't want to waste any time moaning about the latest loss, Gosack said.

"Manufacturing will continue to be important, but it's not the only thing we have to bait our hook for," he said, pointing out that tourism was one area seen as expanding.

"I fully believe that in the coming decade, Fort Smith tourism is going to break out in a big way," said Jennifer Boulden, communications manager for the Fort Smith Convention and Visitors Bureau, pointing to a future U.S. Marshals Museum to be built on the city's riverfront.

Gosack said an Indiana developer bought a defunct Whirlpool plant and turned it into 'condominium' space for several smaller industries. Gosack said that was an option the city and private developers were looking into. The Fort Smith plant has 1.2 million square feet of usable floor space.

PLANNING FOR FALLOUT

But the reality of losing almost 1,000 well-paying jobs will not go away for a community that has seen it before.

One study estimated an annual loss of $57 million in wages for the 974 Whirlpool workers and about 500 other local workers like plastic makers connected to the Whirlpool plant, according to Gregory Hamilton, an economist at the University of Arkansas at Little Rock.

The tax base and the services it supports, especially school districts, will also be squeezed. In 2010, the company paid $1.1 million in local property taxes, Gosack said.

"The River Valley Regional Food Bank has seen its third year of consecutive double-digit increases in need for food support," said Ken Kupchick, the food bank's director of marketing and development. "This Whirlpool announcement sets us up clearly for a fourth."

Michelle Cernak, owner of Westark Plumbing, said that while the city is resilient, she worries about the plant closure.

"We allow payment plans, take post-dated checks and even trade to help those who can't afford to pay for services that are a necessity," Cernak said.

Since the recession, a local campaign has been aimed at the unemployed to learn new skills at the local university.

Jennifer Goodson, director at the Fort Smith Public Library, said previous layoffs had steeled people for the Whirlpool closure. But she expects an increase soon in those needing career help.

"Some of the people we see have spent many years in factory work and have never had to write a cover letter or put together a resume," she said.

(Editing by Peter Bohan)