2013년 10월 26일 토요일

Candyce Maglio's blog ::Republican Economic Agenda Devastating Southwestern Ohio






Candyce Maglio's blog ::Republican Economic Agenda Devastating Southwestern Ohio










"A               great               city               is               that               which               has               the               greatest               men               and               women."-               Walt               Whitman               (1819               -               1892)               A               Life               of               Its               Own
               In               many               ways               a               city               is               a               living               entity.

It               is               continually               evolving               in               feature,               landscape               and               character.

Changes               in               the               "econo-industrial"               landscape               of               a               particular               region               are               not               uncommon               and               when               they               happen               over               a               long               period               of               time               people               rarely               take               notice.

If               brought               on               too               rapidly               however,               they               can               cause               a               kind               of               socioeconomic               culture               shock.
               Imagine               a               tree               growing               from               a               sapling               over               the               course               of               several               decades.

Passing               by               the               tree               on               a               regular               basis,               most               people               wouldn't               pay               much               attention               to               it               because               the               changes               occur               so               slowly.

Now               imagine               if               that               tree               were               suddenly               hit               by               lightning               -               forever               altering               its               appearance.
               It's               the               same               tree,               but               starts               growing               in               different               directions.

The               changes               in               the               tree's               appearance               and               character               stand               out               more               in               this               case               because               they               happened               so               quickly.
               That's               how               a               city               evolves               as               well               and               that               is               exactly               where               the               Miami               Valley               is               today               -               evolving.

It's               just               happening               more               quickly               than               people               would               like               and               it               affects               more               than               just               one               industry               or               town.
               The               Dayton               and               surrounding               regions               have               been               dependent               on               manufacturing               for               over               a               century               and               have               now               been               thrust               into               a               rapid               state               of               change.

Oddly               enough,               that               change               did               not               come               as               quickly               as               most               people               would               like               to               believe.
               More               than               two               decades               ago               Dayton's               largest               manufacturing               employer,               General               Motors,               was               experiencing               similar               problems               to               those               going               on               today.

In               1989,               author               Maryann               Walker               published               a               book               on               the               subject               called,               "Rude               Awakening               -               The               Rise,               Fall               and               Struggle               for               Recovery               of               General               Motors."
               With               a               title               that               sounds               like               it               could               have               been               printed               last               week,               Walker's               book               documents               how               the               auto               maker               nearly               collapsed               once               before               because               of               a               company               culture               and               operating               methods               that               made               no               adjustment               for               changing               times.
               She               even               refers               to               GM               of               the               1980's               as               being               a               microcosm               of               American               industry,               a               faulty               and               outdated               business               model               that               was               copied               by               subsidiaries               and               suppliers.

"The               hard               reality               of               General               Motors,"               Walker               wrote,               "is               that               its               original               systems               have               been               designed               for               conditions               that               no               longer               exist."
               The               company               underwent               a               massive               reorganization               that               began               in               1984,               but               the               damage               had               already               been               done.

Walker               wrote,               "The               bureaucracy               and               outdated               organizational               structure               had               become               so               strangled               that               it               was               virtually               impossible               to               achieve               a               cooperative               working               environment."               Since               division               heads               could               not               agree               on               the               same               course               of               action,               most               of               what               was               wrong               went               uncorrected.

The               company               started               closing               factories               in               the               Dayton               area               even               back               then.
               Of               course,               GM               is               not               the               only               manufacturer               to               leave.

Mead               Paper               and               the               printing               plant               for               McCall's               magazine               left               the               city               years               ago.

Standard               Register,               which               develops               software               for               automotive               dealers,               is               now               cutting               its               workforce               as               well.
               In               a               final               blow               to               the               Dayton               area,               National               Cash               Register               (NCR)               has               announced               after               125               years               it               is               leaving               the               city               altogether.

In               the               early1970's               NCR               discharged               hundreds               of               workers               when               it               shut               down               most               of               its               Dayton               factory               operations.
               Looking               back,               it               is               easy               to               see               that               companies               have               closed               and               people               have               lost               jobs               before,               but               Dayton               and               its               neighboring               communities               are               still               here.

What               makes               the               current               situation               so               unique               and               difficult               is               that               entire               industries               are               changing               all               at               once.

From               Wall               Street               to               Main               Street,               the               recession               affects               people               differently.
               Those               who               own               car               dealerships,               for               example,               have               a               unique               perspective               on               the               situation.

While               they               may               not               employ               as               many               people               as               a               factory,               thousands               of               dealer               franchise               owners               are               being               forced               into               a               spot               from               which               they               may               never               recover.
               Not               Your               Father's               Oldsmobile
               Actually,               Oldsmobile               is               gone               now,               so               are               Pontiac               and               many               other               American-made               models.

The               landscape               of               the               automotive               sales               market               in               the               Miami               Valley               has               undergone               some               earth-shaking               alterations               the               past               year.

Dealerships               that               have               been               in               business               for               more               than               30               years               are               now               scrambling               for               survival               due               to               unprecedented               decreases               in               sales               and               forced               closures               resulting               from               the               bankruptcies               of               GM               and               Chrysler.
               Unfortunately,               several               Dayton               area               dealerships,               including               Harmon               Cadillac               and               Salem               Chrysler               Jeep,               made               the               list               of               thousands               slated               for               closure               by               both               companies.

General               Motors               has               provided               a               "wind               down"               period               to               allow               dealerships               the               opportunity               to               return               stock               and               close               down               their               businesses               in               an               orderly               fashion.

Chrysler,               however,               is               doing               things               differently,               as               Salem               Chrysler               Jeep               owner               Mary               Kay               Zappia               learned               during               a               conference               call               on               May               14               when               she               was               informed               hers               was               one               of               the               dealerships               to               be               closed.
               More               than               40               years               ago,               Mel               Zappia               and               his               wife               Mary               Kay,               freshly               transplanted               to               the               Dayton               area               from               DeMoines,               Iowa,               set               up               shop               to               sell               cars.

Though               Mel               has               passed               on,               Mary               Kay               and               their               two               sons,               John               and               Dan,               have               carried               on               the               family               tradition               at               the               same               location               -               5010               Salem               Avenue.
               "They               notified               us               that               on               the               9th               of               June               that               the               judge               ruled               to               accept               the               deletion               of               789               dealers               throughout               the               country,"               Zappia               said,               commenting               also               that               she               has               had               to               discharge               a               few               workers               due               to               budget               cuts.

"We               have               had               customers               in               here               with               tears               in               their               eyes.

Many               of               them               wrote               letters               to               the               judge               before               he               ruled               on               the               list               of               affected               dealers."
               With               no               evidence               to               the               contrary,               Zappia               strongly               believes               that               the               closures               were,               "arbitrarily               chosen               by               President               Obama's               auto               industry               task               force,"               rather               than               having               been               based               on               the               sales               records               of               the               individual               dealerships.

She               is               not               isolated               in               her               suspicions.
               On               June               12,               the               president               of               Chrysler,               James               Press,               came               under               fire               by               members               of               congress               in               a               special               hearing               to               learn               how               the               company               selected               the               dealerships               that               were               to               be               closed.

Members               of               the               special               committee               questioned               Press               alongside               GM's               CEO,               Fritz               Henderson,               regarding               the               methods               used               to               determine               which               franchises               would               be               terminated.
               Congressional               leaders               like               Peter               Welch,               a               Democratic               representative               from               Vermont,               argued               that               the               selections               were               arbitrary               with               little               or               no               opportunity               for               appeal.

James               Press               disagreed               stating               that               the               selection               of               dealerships               was,               "not               made               by               the               White               House,               it               was               made               by               our               company,               Chrysler."               Either               way,               the               result               is               the               same               -               the               closing               of               thousands               of               businesses               around               the               country               and               more               unemployed               workers.
               Zappia               noted               that               regardless               of               this               news,               her               business               is               still               open               for               pre-owned               vehicle               sales               and               non-warranty               repair               work               for               all               makes               and               models.

"We               are               losing               the               Chrysler               franchise,"               she               said,               "but               we'll               keep               doing               what               we're               doing               until               we               make               a               decision               where               to               take               things               from               here."
               The               Zappia               family               is               not               alone,               however,               literally               thousands               of               other               franchises               have               yet               to               shut               down               and               General               Motors               and               Chrysler               are               not               finished               yet.

Discussions               are               still               going               on               about               more               factory               and               dealer               closures,               as               well               as               the               condition               of               retiree               benefits.

Plus,               there               is               still               the               question               of               exactly               what               these               companies               will               look               like               on               the               other               side               of               the               bankruptcy               proceedings               now               that               Uncle               Sam               is               a               major               stock               holder.
               Out               of               the               Frying               Pan
               During               the               1980's               GM,               Ford               and               Chrysler               were               lagging               behind               import               car               companies               whose               market               for               small,               more               fuel-efficient               cars               was               growing               in               America.

In               Dayton,               GM               workers               had               to               deal               with               the               frustration               of               layoffs               and               call               backs               on               a               regular               basis               in               an               effort               to               save               money               in               the               short               term.
               The               company               would               lay               off               30               to               40               people               at               once               and               then               call               them               back               to               work               some               time               later.

Workers               had               no               idea               when               a               layoff               would               occur               and               when               it               finally               came,               all               they               could               do               was               wait.

Journeyman               machine               repairman               and               builder               Marty               Walling               got               tired               of               waiting.
               Walling               started               out               as               an               apprentice               at               the               Inland               Division               of               General               Motors               in               1977.

In               the               1980's               he               was               doing               well,               but               experiencing               consistent               layoffs.
               "I               got               tired               of               the               layoffs               after               the               third               time,"               Walling               said.

"I               had               always               dabbled               in               building               and               construction,               so               I               left               GM               in               1982               and               went               to               work               for               a               builder               in               Beavercreek               who               was               putting               up               a               126-unit               condo               development."
               "We               were               the               new               product               in               town               so               we               were               only               building               two               or               three               units               for               the               first               couple               of               years,"               Walling               said.

"But               then               it               got               to               the               point               where               we               couldn't               build               them               fast               enough               and               we               finally               ran               out               of               land."               The               company               then               purchased               other               property               for               development               and               did               some               commercial               construction.
               "Builders               got               lackadaisical               because               anything               we               wrote               at               the               time               we               got               a               contract               on,               which               was               probably               because               of               how               money               came               so               easily,"               Walling               recalled.

"Anyone               could               get               a               mortgage               for               anything               back               then.

They               were               making               loans               on               the               hoods               of               cars."               But               that               wave               would               die               out               soon               enough               for               many               in               the               business.
               According               to               the               U.S.

Department               of               Housing               and               Urban               Development,               in               May               of               this               year               491,000               new               single-family               homes               were               completed,               a               9.4               percent               drop               from               April.

Walling               may               have               escaped               the               final               collapse               of               General               Motors,               but               is               he               worse               off               now               as               a               home               builder?

He               doesn't               think               so.
               Most               builders               agree               that               the               higher               end               market               ($350,000               and               up)               is               still               selling,               albeit               not               as               it               was               before.

"Today               our               company's               target               market               is               the               empty-nester,"               Walling               said,               "with               prices               ranging               anywhere               from               $170,000               to               around               $200,000,               and               80               to               90               percent               are               cash               buyers."
               Realtors               insist               it               is               a               buyers'               market,               but               it               is               still               harder               to               get               a               mortgage               than               it               was               three               years               ago               and               that               creates               a               problem               for               the               empty-nester               looking               to               trade               up.

"Even               though               these               people               can               get               a               mortgage,               someone               in               that               stage               in               their               life               is               not               willing               to               do               that               if               they               can't               get               a               buyer               for               their               current               home."
               One               thing               obviously               affects               the               other,               but               the               hope               is               that               as               more               securely-based               mortgages               are               written,               the               system               will               stabilize               itself.

At               least               that's               the               idea.

Buying               power               is               not               just               a               limitation               of               home               sales,               however.

It               also               affects               local               retailers.
               Retail               Space               Available
               It               is               common               knowledge               that               retail               sales               have               fallen               substantially               over               the               last               couple               of               years.

Cable               TV               news               programs               are               loaded               with               stories               about               the               latest               retailer               to               go               out               of               business               or               file               bankruptcy,               the               most               recent               being               Eddie               Bauer.
               It               only               stands               to               reason,               after               all,               that               when               times               get               tough,               people               spend               less               -               right?

Not               necessarily,               according               to               Pamela               Cochran,               property               manager               at               Town               &               Country               Shopping               Center               in               Kettering.

"People               are               spending               their               money               more               wisely               and               Kettering               is               very               loyal,"               Cochran               said.
               Opened               in               1951,               Town               &               Country               has               the               reputation               of               being               the               first               shopping               center,               even               among               those               in               the               industry.

Cochran               has               been               the               property               manager               for               the               last               16               years.

"Town               &               Country               is               operated               by               the               third               generation               of               the               family               that               started               it,"               Cochran               said.

"It's               in               an               excellent               location,               in               what               is               considered               to               be               Kettering's               downtown               area."
               "We               have               41               tenants               right               now,               about               75%               of               our               capacity,"               she               added,               "with               two               pending               sales."               Walking               through               Town               &               Country,               however,               shoppers               may               notice               a               number               of               unoccupied               shops,               but               not               for               the               reasons               one               might               think.
               About               every               10               years,               the               owners               of               the               facility               make               changes               to               the               building               to               update               it               wherever               possible.

This               year,               they               had               planned               to               remove               the               front               of               the               building               and               make               Town               &               Country               an               open-air               shopping               center.

Two               issues               prevented               the               renovations               and               the               economy               came               in               second.
               The               number               one               reason               for               scrapping               the               project               came               from               the               community.

"Our               owners               asked               the               community               to               tell               us               what               they               thought               of               the               change               and               they               asked               us               to               keep               it               just               like               it               is."               That's               exactly               what               they               intend               to               do,               which               actually               worked               in               their               favor,               financially.
               As               the               economy               continued               to               dip,               it               made               more               sense               to               do               some               upgrades,               rather               than               spend               a               great               deal               of               money               on               changes               that               the               buying               public               did               not               want.

But,               anticipating               that               the               owners               were               going               through               with               the               open-air               plan,               some               tenants               chose               to               move               or               expand               elsewhere,               leaving               behind               empty               stores.
               People               stop               spending               when               they               have               nowhere               to               spend               or               when               they               have               no               job               to               provide               them               with               the               money               to               do               so.

With               large-scale               employers               leaving               or               reducing               their               workforce,               municipal               governments               are               seeing               a               loss               that               goes               beyond               retail               sales               figures.
               Dayton               Mayor               Rhine               McLin               agrees               that               more               must               be               done               to               retain               the               businesses               and               jobs               already.

"Our               biggest               loss               is               from               income               taxes,"               McLin               said.
               "In               Ohio,               the               major               revenue               stream               for               municipalities               comes               from               the               income               tax               of               those               who               work               there."               When               General               Motors               and               NCR               left               the               area,               Dayton               lost               $2.5               million               in               income               tax               revenue.
               It               Is               All               Academic
               What               happens               when               the               recession               hits               someone               who               has               yet               to               begin               a               career?

The               Class               of               2009               will               certainly               have               a               challenge               as               they               go               out               into               the               workforce.
               Dr.

Jeannette               Davy               is               a               professor               of               business               management               at               Wright               State               University's               Raj               Soin               College               of               Business.

She               believes               that               creativity               will               be               the               secret               of               their               success.

"Graduates               will               need               to               be               more               creative               in               packaging               themselves               when               applying               for               the               jobs               that               do               exist               and               are               being               created,"               Davy               said.

"While               new               graduates               don't               have               the               experience               in               most               cases,               they               have               an               advantage               in               that               they               may               be               cheaper               to               hire."
               The               problem               comes               when               people               who               have               been               without               jobs               for               months               or               are               now               faced               with               long               stretches               of               unemployment               are               willing               to               take               jobs               at               lower               pay.

"Fewer               of               the               high               paying               jobs               in               traditional               industries               exist,"               Davy               remarked.

"New               graduates               are               competing               with               people               with               much               more               experience               who               have               lost               their               jobs.
               Davy               continued,               "In               order               to               find               jobs,               more               and               more               of               our               graduates               will               have               to               leave               the               area.

This               will               further               contribute               to               the               brain               drain               Ohio               is               experiencing."               That               means               graduates               who               want               to               stay               in               the               area               must               be               willing               to               make               concessions               -               like               slightly               lower               salaries               or               reduced               benefits               -               which               creates               its               own               paradox.

In               order               to               entice               a               new               graduate               to               stay               in               Dayton,               employers               would               have               to               do               just               the               opposite               by               offering               better               money               and               benefits               that               their               competition.
               To               give               graduates               somewhere               to               work,               city               governments               are               trying               to               convince               businesses               to               stay               in               the               Dayton               area,               and               even               lure               in               some               new               ones.

"The               way               we're               going               to               get               out               of               this               is               one               job               at               a               time,"               said               Dayton               Mayor               McLin.
               She               and               other               Miami               Valley               leaders               are               working               to               provide               resources               and               support               to               small,               high-tech               startups.

In               theory,               several               smaller               companies               mean               less               risk               to               the               overall               economy               than               a               few               large               employers               -               especially               if               some               of               them               should               fail.

But               there               is               still               much               to               be               done.
               Is               it               tough               out               there?

Yes,               but               it               will               get               better.

Are               we               there               yet?

Not               quite.

The               Miami               Valley               still               has               a               good               bit               of               growing               to               do.

Think               of               these               changes               not               as               "recovery,"               but               as               growth               or               evolution.
               It's               just               the               next               step               in               the               life               of               the               historic               Gem               City               and               all               of               her               neighbors               who               depend               on               each               other.

In               the               end,               it               will               be               the               actions               of               the               people,               not               the               wavering               economy,               that               determine               the               overall               effects               of               a               difficult               situation.
               So,               where               do               we               go               from               here?

Find               out               in               Part               III               of               our               series,               "Economic               Transition               in               the               Miami               Valley."




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