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Goodyear Tire: End of an Era for West Kentucky and Tennessee

At 7:58 a.m., Thursday morning, February 10th, 2011, the end of heavy products manufacturing in Mid America was announced in Union City, Tennessee. This was the bad news that the Goodyear Tire Plant at Union City, Tennessee would be closed in 2011. The early morning news stunned the 1,900 workers at the plant and sent economic shock waves through Union City, Tennessee. 

Corporate officials praised the productivity of local workers. The rationale for the closing of a plant that had recently produced its 450 millionth tire was a quarterly loss of $160 million dollars. However, business news stations were reporting 14 cents a share profit for the company in that same quarter, leaving observers puzzled over the company’s explanation.

Going forward, the company expects an 80 million dollar benefit by closing the Union City plant. It is speculated that the factory, built in 1968, making it the oldest tire plant in North America, would be expensive to upgrade. In 2008, the company invested $500 million dollars in opening a plant in Dalin, China. The company has retained other plants in the US. The closest plant to Union City is in Gadsden, Alabama, 300 miles away.

In the two minutes it took to make the announcement, economic life within a fifty mile radius of Union City was devastated as plant workers, their families and friends all of a sudden had to worry about car loans, mortgage payments, college costs, food, medicine, and insurance.

The average base salary at the Goodyear Tire Plant was $24 dollars an hour. Full time workers could gross $5,800 per month or about $69,600 a year.

Out of the 1900 workforce at the plant, 18 %, 354 workers, came from the Kentucky Jackson Purchase, (Fulton with 121; Hickman; 35; Carlisle 21; Southern Graves County 142, McCracken 11, Marshall 8 and Calloway County  12.) This information was supplied by Jennifer Beck-Walker, Executive Director of the Purchase Area Development District.

Local and Regional Economic Impact Case Study

Recently, the Institute for Research on Labor, Employment and the Economy (IRLEE) at the University of Michigan studied the impact of a single, large manufacturing plant closing in heartland America. The case study was the impact of the closure of the General Motors (GM) Moraine Assembly Plant in Montgomery County, Ohio.

The researchers found that for every hourly job lost, a low figure of 8 jobs in the economy disappeared with it. They also found that under certain conditions, a high figure of 15 jobs could also be lost per direct line worker.

GM closed its 4.1 million sq. ft. Moraine Assembly factory in late 2008, laying off 2,170 hourly workers. The closure also caused the loss of another 10,850 indirect jobs in the immediate area of the plant.

The loss of jobs was not confined to just the plant site and the few miles around it. Massive job lost occurred within the small army of suppliers to the GM factory accounting for the loss of another indirect 3,000 jobs. Directly and indirectly, this one heavy industry assembly plant closing impacted a total of 16,020 workers.

Economic Impact on West Kentucky

Using the low level job loss from the GM Moraine Plant, it can be calculated that in Hickman, Carlisle, Fulton and Graves County,  Kentucky, there will a direct loss of 342 skilled workers with an annual payroll of $23 million dollars.

Indirect job loss for this region of far western Kentucky, based upon figuring indirect 4 jobs per 1 direct hourly worker would be 1368 jobs. Potential loss in revenue would be an average of $12 per indirect job or about $ 2,000 per month per employee. Annual indirect job loss could be $32,000,000. Combined potential total loss from worker annual salaries from the closing of the Goodyear Tire Plant could be just over $56 million dollars. Union City TN centrally located to several states

From Job Loss to Recovery – Local, State and Federal Response
 
Once the parent corporation makes the decision to pull the plug on a major factory, federal and state teams move in. The process is something like going through a major natural disaster. The event (factory closed) takes place. Local elected officials and business leaders, rally to form fast track teams to work with the factory owners, (hurrying to secure the land and factory for future use), and their soon to be jobless workers.

At the same time, regional and state rapid response teams are formed to start the process to move money, technical help, and education platforms for the impacted county and the individuals.  The Dislocated Worker Program, managed by the West Kentucky Workforce Investment Board, will be quickly moved into place.

From Regional Disaster to 21st Century Economic Foundation
 
The news of Goodyear Tire closing was a wake up call for all of the counties in West Kentucky and West Tennessee, located between the Mississippi and Tennessee Rivers. Within this territory, Union City’s Goodyear Tire Plant represented the last of a kind of American technology and skilled manufacturing of raw natural resources into a high price per item finished product. 

Goodyear was the last major mega factory (employment over 2,000) from the roaring days of cheap land and cheap labor for large northern factories moving into the South.
In 1970, the eight counties of the Jackson Purchase had over 30,000 manufacturing jobs from 28 factories. As of 2011, most of these jobs have been moved overseas.

The counties of West Tennessee experienced the same economic story. From 2008 through 2010, four large plant closings in Brownsville, Covington, Jackson and Ripley closed. Over 2,000 workers lost their jobs.

However, as bleak as this story may sound, there is hope for better jobs on the horizon. On the same day as the Goodyear Tire Plant closing was announced, Mitsubishi made their own announcement that they plan to commit 200 million dollars into the Memphis area for a new factory.

Last month, officials in Jackson, Tennessee showed off the largest solar farm in West Tennessee. All parts and materials for this 21st Century energy project are made in Memphis.

The hope is that a new manufacturing base of high tech, 21st century jobs will be created to replace 20th century large factory manufacturing jobs.

The Goodyear Tire Plant has 2.2 million sq. ft. covering 52 acres under roof. Speculation from regional economic planners is already involving ideas for turning this site into a major regional Mid America World Trade Center for handling goods coming up the Mississippi River. By 2014, giant container ships will be able to travel from Asia through a second new enlarged Panama Canal up to New Orleans. These ships are designed to carry 10,000 plus cargo containers   

Fulton County Judge David Gallagher, commenting on the Goodyear announcement,   said “The timing for this closure will create extreme hardship for many in our area. This closure is the first major challenge five county Kentucky Tennessee partnership. Our mission to bring in new jobs to this region just became more critical.”

 

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