A Revolution on Resolutions

By Karen S. Lynch

I have never been inclined to make New Year resolutions. While losing some weight and exercising more would be a good thing, I have never been very successful at either one. Hanging a new calendar on the wall each year is not going to change my self-destructive mind set in one day. I prefer to look back each New Year at the prior year. I always hope that I have learned something from my mistakes.

Mistakes are not unique to my own choices or many others in our city. It is easy to look back, knowing where I made bad choices – trusting Maytag to keep their promises to employees (and taxpayers) was a big mistake. Concessions were common and frequent from employees – never enough for overpaid executives. Layoff notices came any way. Tax incentives and abatements handed out by city and development officials like a credit card with no limits. The plant closed anyway. Maytag finance officers took their last tax incentive check with them after the last packing box left the empty building.

I made a mistake believing a company 401k plan could generate a better retirement income than the company paid pension, which doubled in value by the time Maytag announced in 2002 the plant was closing. Because half the investment was Maytag stock, employee investors had already lost more than half their retirement savings before the current market conditions tanked.

The biggest mistake of all – believing Maytag would keep its word on an early retirement insurance grandfather (Maytag officials put in writing) if we retired by the end of 2002, two years before the plant was scheduled to close. A new contract with the office union contained newly negotiated language for six weeks of severance pay should the plant close. (Was that a clue?) Our office union was proud of the new contract language representatives viewed as a wonderful new benefit.

The plant union had no severance pay clause in their contract. With company officials predicting insurance premiums between $200 -$300 a month, nearly 200 retirement-eligible employees saw few choices with out health insurance held hostage. Early retirees did not know after they had reluctantly accepted the “early out” agreement, the severance pay would increase ten-fold up to six months. Although I was skeptical, I fell pray to the same company lies, as did most of our own union representatives. Maytag did not pay any severance pay to most of their highest seniority employees. Maytag CEO Ralph Hake walked away with an estimated “golden parachute” in excess of $10.5 million. Other executives did well for themselves as well.

Despite paying workers in Mexico approximately $1.07 an hour, Maytag went broke in spite of stating the move to Reynosa was necessary to stay “competitively viable.” Whirlpool closed that plant and are currently handing out layoff notices to hundreds more workers and shuttering more manufacturing facilities. The current recession effect on sales of big appliances, many costing more than a thousand dollars, with continued foreign competition and a downturn in new housing has been devastating on business.

Adding to the misery is the ever-escalating cost of health care to employees and the very same retirees who retired early to protect themselves from high health care premiums, with high deductibles and diminished coverage.

This is our past but also the challenge to our future. The de-industrialization of the United States is not unique to Knox County, or the first to feel the effects of outsourcing good jobs. The rust belt of Pennsylvania could not compete with foreign steel prices, heavily subsidized by Asian nations.

The big three auto producers are finally starting to awaken to the revelation they are not designing or producing what American buyers want. Insanely high gas prices killed the sales of gas-guzzling SUV and vans. Large trucks with their powerful V-8 engines still have a market nitch with construction workers and farmers who depend on big strong trucks. Gas prices had little effect on those sales as long as the economy still supported those two sectors.

With the entire nation awakening to a new reality of rapidly increasing unemployment, rising inflation and credit nearly unobtainable, 2009 promises to be just the beginning of a tough rode ahead. Galesburg had seen tough times before. We did not think we would recover when Gale Products closed in 2003 but other manufacturing plants gradually absorbed many displaced workers. The closure of Research Hospital the following year not only cost jobs, it placed a strain on hospitals, nursing homes, and the penal system for lack of available mental health services. The problem has only gotten worse with time.

Economic development in a “blue collar” town is a difficult problem. GREDA is taking the brunt of the blame for not delivering promised jobs. With the secrecy surrounding GREDA and its predecessors, it is hard to say if they actually have a “competitively viable” economic plan.

Without a large manufacturing base attracting other support operations, logistic warehouses like those proposed for Logistics Park may not make sense for our area. I have to wonder if this expensive gamble ever had a chance. Despite the second largest railroad freight yards, logistic shipping operations have found a better fit along the I-80 corridor. This major interstate runs coast to coast, close to many large cities and thousands of warehouse operations. It is hard to imagine why an Intermodal railway system, from what would likely be an Asian market would want to stop in the middle of a cornfield just 45 minutes from a major city.

Another focus for economic development based on tourism is also a gamble. With a major tourist attraction, the Carl Sandburg State Historic Site closed (except for special events) by Governor Blagojevich budget cuts. Despite a “funds sweep” to generate cash to keep this and other state historic sites and parks open, the current scandal surrounding the governor leaves tourist dollars in limbo. Even if the governor loses his office to an impeachment, the state is still broke and will have to either raise taxes or cut expenses.

There is plenty of pain in an economy nearing a full-out depression. Galesburg is certain to have more tough times ahead and will have to be very creative with a job creation goal. I do not pretend to have answers to difficult questions. I do know from history what does not work.

The recent bailout on the back of taxpayers has seen few results. People are still losing their homes and have little access to credit, even if they have a good somewhat stable job. Greed is still present in CEO and executive pay. Big banks using bailout money to buy up other banks, instead of helping homeowners is not a surprise in anything government run. Crooked politicians who solicit campaign contributions for business favors or offer power positions to contributor friends is not unique to Illinois, “Pay to Play.” Big business is not that much different from politics. Those that have money have the most say.

One thing is certain, Galesburg must find what kind of town we want to be in the future. The loss of good jobs is just one piece to the puzzle. Keeping citizens inside the city limits who want to live in Galesburg and experience a good quality of life is just as important. That is going to require retention of our many fine arts, quality and affordable housing and an attractive city environment. More citizens who own homes equates to a better tax base and more retail and service jobs. If we are to become a bedroom community suburb housing will be key. Having enjoyable activities is a necessity.

I doubt the hundreds of trains passing through town each day would stop if Logistics Park never sees development. I just hope the passenger rail service still has a reason to stop at the BNSF depot – hopefully for tickets that are not one way out of town. Our destiny is in all our hands and the choices we make. I hope that a new governor and a new President will help – eventually.

1/8/09