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As Auto Prosperity Shifts South, Two Towns Offer a Study in Contrasts
It helps to have a car company that knows what it is doing and what the
consumer wants. What a refreshing change!
As Auto Prosperity Shifts South, Two Towns Offer a Study in Contrasts
[url]http://www.nytimes.com/2006/12/05/business/05cities.html?_r=5&oref=login&pagewanted=all[/url]
Twenty years ago, Livonia, Mich., was a prosperous Detroit suburb, with
upscale neighborhoods and high-end stores in a new mall selling Hermès and
Chanel, which some locals wore on special occasions to dine at the romantic
Fonte D'Amore restaurant.
The local economy was thriving because of the Big Three automakers, which
operated humming factories near Livonia and employed thousands of managers
who commuted about 20 miles to the auto companies' headquarters downtown.
Three hundred miles to the south, drivers back then on Interstate 75 could
zip right by Georgetown, Ky., and barely notice it, with its tiny downtown,
small college, quaint Victorian homes, and a spring that locals claimed was
"the birthplace of bourbon." The local hangout, Fava's, was about the only
place for a decent meal.
Now, two decades later, the two cities have seemingly switched places
economically.
Livonia is stumbling, as Detroit's automakers close factories and eliminate
blue- and white-collar jobs. Just last week, Ford Motor announced that
30,000 workers had opted for deals worth up to $140,00 to leave. In all,
with similar offers at General Motors, about 70,000 auto workers, or
one-third of those in American plants, have decided this year to leave.
Georgetown, however, is booming because of Toyota, which has invested more
than $5 billion in a sprawling manufacturing complex, leading to the
construction of new schools, hotels and dozens of smaller factories run by
suppliers to Toyota.
Their changing fortunes offer more than a tale of two auto cities. They
provide a close-up look at the impact of a broader economic shift of the
nation's auto industry from north to south, as Detroit falters and their
surging Asian competitors invest in Southern states.
Over the last two decades, for example, the number of automotive-related
manufacturing jobs in Michigan has fallen 34 percent, according to
Economy.com. By contrast, the number of automotive jobs in Kentucky rose 152
percent over that period.
"There is a definite shift away from the strongholds of American
manufacturing to places that were never manufacturing centers," said Gary N.
Chaison, a professor of industrial relations at Clark University in
Worcester, Mass. "These international companies want a fresh start - not in
a town like Detroit, with a long history in the auto industry, but in an
empty field where people appreciate them."
The shift carries with it not just thousands of well-paying jobs and
billions of investment dollars, but also a sense of prosperity gained or
lost.
In Georgetown, it means managing a rapidly growing population, being
dependent on a single employer, and hoping that Toyota's march to the top of
the global automobile industry continues.
Fewer Jobs and Services
For Livonia, the shift means acknowledging that the industry that once
provided its region the equivalent of civil service jobs can no longer be
relied upon, forcing the city to shrink the services it can offer residents.
Despite signs at Livonia's border boasting of "55 years of progress," Mayor
Jack Engebretson recently had to lay off 90 people and cut $5 million from
the city's budget. Seven elementary schools closed this fall because of
falling enrollment. Wonderland, among Livonia's original shopping centers,
was torn down over the summer.
In once-prestigious neighborhoods like Old Rosedale Gardens, even price cuts
do not help owners sell their historic properties. Detroit's auto companies
have also pulled back on moving employees around the world, meaning there is
less of a reliable churn in the local housing market.
"Three years ago we had just as many people transferring in as out," said
Jeff Glover, a local Realtor. "Now it's about three transferring out to one
transferring in."
Herb Miller, 80, moved to Livonia from Detroit in 1961 when he transferred
to a job at the newly built G.M. bumper plant in town. He still loves
Livonia, but rising crime concerns him.
"It seems like about the time that everybody was writing about what a great
place this is to live, things started to change," said Mr. Miller, recalling
several murders that shook the community several years ago.
Although retailers have been clamoring to build on the west side of Livonia
to serve wealthier exurbs, his section of town has been losing businesses.
The closest shopping center, the 42-year-old Livonia Mall, is likely to be
demolished within a few years. "They've got to do something about that -
that's a dead mall," Mr. Miller said.
Livonia's population, which exploded from 18,000 in 1950 to peak at almost
120,000 in the 1970s, now appears to have fallen below 100,000, according to
an estimate by the Southeastern Michigan Council of Governments.
Today, Plymouth Road, the city's longtime business corridor, is more of a
reminder of the city's past success than a shopping destination. The aging
owner of Fonte D'Amore closed his Italian landmark restaurant this summer.
Livonia's annual holiday parade was discontinued three years ago because of
budget constraints. Nearly all of its strip malls have vacancies.
There is no mystery why Plymouth Road is hurting. Michigan has the highest
unemployment rate in the country, and both General Motors and the Ford Motor
Company are eliminating tens of thousands of jobs through buyout and early
retirement offers.
Workers at all three Detroit automakers live in Livonia, but it considers
itself primarily a Ford town. Jobs at Ford originally helped attract
residents who fled Detroit after the 1967 riots, and the company employs
more than 4,000 people at its transmission plant on the west side of town.
For now, those jobs appear to be safe, and in fact, Ford recently filed
paperwork to invest about $45 million to update the factory. But with Ford
trying for its third turnaround in five years, that commitment could change.
"There are a lot of Livonia residents that are going to face challenges as
Ford goes through its reinvention of itself," Mr. Engebretson said. "We're
holding our breath."
Smaller manufacturers in Livonia have been hit hard. The city has one of the
Midwest's largest industrial corridors, a six-mile strip of factories and
warehouses along Interstate 96. In 1995, more than 95 percent of Livonia's
40 million square feet of industrial space was occupied. The vacancy rate
has more than doubled since then.
Officials recently started marketing the corridor with the slogan
"Industry's
Highway" in the hopes of filling some empty buildings, ideally with
companies that are not in the auto business.
"We don't want to be tied in any significant way to any one industry because
it's just not a healthy thing to do," Mr. Engebretson said.
As for Georgetown, it had no industry to speak of and only one McDonald's
when Gov. Martha Layne Collins made her first trip to Japan in the
mid-1980s, hoping to lure a foreign auto company. She had watched as
Kentucky's northern neighbor, Ohio, landed two Honda plants and a big
technology center, while to the south, Tennessee had lured both Nissan and
won the Saturn plant.
An Enthusiastic Reception
She said she believed that Georgetown was an ideal location, set near the
intersection of Interstate 75 which runs north to south, and Interstate 64,
which travels east to west. It is also just 15 minutes from Lexington, home
to the University of Kentucky and a small airport.
When Toyota began narrowing its options, the state Legislature approved a
$147 million incentive package to help land the factory - 30 times what Ohio
spent to land Honda, although half what Alabama would eventually spend to
lure Mercedes-Benz.
Georgetown residents were excited by the possibilities. "I know what it was
like here before Toyota came," said George Lusby, the Scott County executive
judge, the equivalent of a county administrator. "Back then, the stores were
half empty."
Still, there was criticism of the governor for seeking foreign investment,
and fears among some residents that a foreign company might not be loyal to
the state. "Toyota is now accepted as part of the fabric of Kentucky, but it
wasn't 20 years ago," said Dennis Cuneo, who recently retired as an
executive in Toyota's North American manufacturing operations and is now a
consultant to the automaker.
Given that Toyota has invested more than $5 billion to date in Georgetown,
"I'd do it again tomorrow," Ms. Collins said.
Among the original workers to land a job at the plant was Cheryl Jones, a
manager at a local supermarket with no factory experience. Twenty years
later, she is now vice president for manufacturing at Georgetown, and
recently traveled to Mexico to help open a new Toyota plant there.
"I've been all over the world now because of Toyota and the plants that we
have," Ms. Jones said.
Workers in Georgetown sometimes find themselves stuck in the miniature rush
hour that occurs in late afternoon, when pickup trucks and Camrys pour out
of the factory and turn onto Cherry Blossom Boulevard.
The local population has nearly doubled in 20 years, to about 20,000. There
are at least a dozen new subdivisions, and some houses have been built
directly across from the Toyota plant.
So have dozens of smaller factories, creating something akin to the
industrial corridor in Livonia. Prospective investors are constantly on the
phone to Jack Conner, executive director of the Georgetown/Scott County
Chamber of Commerce, looking for vacant land where they can build new
plants.
The buildings are not all commercial. Just this decade, Georgetown has built
a recreation center, complete with an outdoor skateboard park; new
elementary, middle and high schools; and is expanding a Japanese garden. The
Cincinnati Bengals now hold summer practice in Toyota Stadium, also used by
Georgetown College.
Downtown Georgetown bustles with antique stores, an espresso bar in the old
bank building and Fava's, which recently got a face-lift and now sells
T-shirts and postcards, along with its meringue pies. The city now has three
McDonald's and a Wal-Mart Supercenter.
An Uneasy Feeling
Yet, some worry that the prosperity will not last. Employment at the plant
leveled off about two years ago, at about 7,800 workers, and there is little
likelihood Toyota will hire many more, except to replace those who are
beginning to retire from the factory.
Plant managers, however, are constantly lobbying the company for new work,
and landing it. This summer, Georgetown began building a hybrid version of
the Camry sedan, replacing production previously done in Japan. And there is
a large swath of empty space inside the factory that could be used to add
another model to the plant, perhaps a crossover vehicle or a Lexus luxury
model.
"There will never be another Toyota," Ms. Collins said. "There are other
companies, there are other manufacturers, but there is only one Toyota."
Back in Livonia, Mayor Engebretson remains optimistic that the city will
regain a sense of prosperity. He readily acknowledged the challenges facing
the city, which has fared better than crumbling factory towns like Flint, a
national symbol of the auto industry's decline.
"All in all, I think Livonia is still a very vibrant community, and I am
convinced unequivocally that our brightest days still lie ahead," he said.
"People have fallen on hard times, but we're working awfully hard to keep
the status that has been enjoyed by this community for many years."
--
"Your best, last and only line of defense-a cohort of Roman Heavy Infantry"
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