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