January 12, 2010    Volume 17, No. 1

Search Back Issues
Guest Editorials
Trading Exchanges
About Us

Lean Machines Sixteen Case
Studies On Lean
From Manufacturing &
Technology News

Free e-mail newsletter

A GM Factory With 2,100 Workers Closes, And 33,000 Other People Lose Their Jobs -- Impacting 120,000

By Richard McCormack

The economic impact caused by a single, large manufacturing plant closing in America is massive, according to research conducted by the Institute for Research on Labor, Employment and the Economy (IRLEE) at the University of Michigan.

In a case study on the closure of the General Motors Moraine Assembly Plant in Montgomery County, Ohio, IRLEE director Marian Krzyzowski and associate director Lawrence Molnar found that for every hourly job lost 15 jobs in the economy disappeared with it.

GM closed its 4.1 million-square-foot Moraine Assembly operation in late 2008, laying off 2,170 hourly workers. The event led to the loss of another 10,850 indirect jobs (for a total of 13,020 jobs lost) in the immediate vicinity of the plant.

But job losses cascaded through GM's supply chain, with the elimination of another 3,334 jobs: DMAX laid off 645 workers; Jamestown Industries laid off 80 workers; Johnson Controls laid off 130 workers; PMG Ohio laid off 70 workers; Plastech laid off 88 workers; four Delphi plants that supplied Moraine laid off 2,120 workers; Tenneco laid off 118 workers; and EFTEC laid off 83 workers.

As a result, the total number of indirect jobs lost due to the Moraine plant shutdown was 27,520.

In all 33,024 workers were impacted by closing one large factory.

The economic cost was monumental. By calculating the loss of 2,170 GM jobs at $100,000 each and the 10,850 indirect jobs lost at $45,000, the total economic impact to the regional economy from the GM Moraine Plant closure was $705,250,000.

"For every one direct job lost, four [more] people are affected by loss of livelihood, insurance, etc.," so that the total number of individuals affected was 52,080, write the researchers in a presentation to the Federal Reserve Board of Chicago.

The loss of automotive manufacturing jobs has placed a "growing strain on the safety net," say Krzyzowski and Molnar. Between 2007 and 2008, the Dayton Area United Way experienced a 240 percent increase in its Food Pantry Visits; a 220 percent increase in Basic Needs Calls for food, housing, material resources, temporary financial assistance and transportation; and a 160 percent increase in "other needs calls" for such things as legal services, income security and mental health care counseling. Yet, revenue at the Dayton Area United Way's partner agencies declined by 17 percent. "As a result, two in three agencies are reducing non-personnel costs; four in 10 are laying off staff or are reducing staff hours and one in five has had to eliminate programs and reduce services," say the researchers.

Under contract from the U.S. Economic Development Administration, the IRLEE spent three years studying 23 communities impacted by dislocations in the automotive industry in Michigan, Ohio, Indiana and Wisconsin. IRLEE found that the "regional social safety net [is] vastly inadequate to meet current and increasing needs." The two recommended that the following policies be adopted:

• Identify a federal agency to provide emergency funding that will help meet the additional demand in social service agencies;

• Pay special attention to children of dislocated workers for lack of food and basic needs;

• Pay attention to families and their inability to meet their own needs; and

• Focus on layoff aversion and job retention and creation in small- to mid-sized firms.

Provide us with a comment on this article.

We'll notify you as issues and free stories like this one appear on this site. Sign up for a content-rich, e-mail newsletter. (You will NEVER receive spam.)

Please consider subscribing to Manufacturing & Technology News. You will have access to all back issues dating to 1998, plus receive the current issue electronically and via regular mail. It is all original reporting on the most important stories facing U.S. industry. No advertising. The cost of a new subscription is $395 per year.

Scan Back Issues Comments | About Us | How To Order

Reproduction Rights 2010 Are Granted To This Story So Long As A Link Is Provided To This Source Of Original Content