FORT SMITH — Rick Nemeth didn’t expect to get laid off from the Whirlpool Corp. plant in Fort Smith. After all, he’d worked for the giant appliance manufacturer for 29 years.
And Augusto Ramos, 39, hasn’t worked a day in his life at Whirlpool, but when the plant closes, his job will be swept away, too.
When the 2 million square-foot plant in Fort Smith closes on June 29, it will end almost 1,000 company jobs and more quietly claim another 1,000 jobs at related businesses in the area, according to a study by an economics professor at the University of Arkansas at Fort Smith.
Ramos is the production manager for a Fort Smith foam company that supplies Whirlpool packaging for appliances. Whirlpool won’t actually sign Ramos’ pink slip, but he’s no less a casualty of the appliance-maker’s closing.
Economics experts say the 1,000 Whirlpool jobs will rank among the biggest mass layoffs in Arkansas in at least six years.
Kathy Deck, director of the Center for Business and Economic Research at the University of Arkansas at Fayetteville, could recall only one larger layoff announcement in that time. That was 1,500 jobs at Pilgrim’s Pride in El Dorado in 2009.
Combined with the loss from Whirlpool-dependent businesses and industries, the Fort Smith-area’s economy will take a hard punch.
It adds up to “a huge loss,” said Latisha Settlage, an economics professor at the University of Arkansas at Fort Smith. “When this many jobs are lost, that’s a tough hit.”
Settlage designed a 2011 forecasting model that assesses the wider impact. She undertook the project after Whirlpool, one of the city’s largest employers for 50 years, announced its closure on Oct. 27.
Howard Carruth, who has worked at Whirlpool’s Fort Smith facility for 42 years, has a forecast of his own.
He will lose his $20.85-per-hour maintenance job. The 61-year-old had hoped to work at least another year at the company that has offered some of Fort Smith’s highest manufacturing salaries. He is worried most about his younger co-workers, who might have to take pay cuts in their next jobs.
And he thinks Arkansas’ second-largest city will notice a lot more families struggling financially.
“I think there could be more foreclosures, more autos repossessed, more divorces,” Carruth said.
“And it may be just as simple as stopping at a [convenience store] for a bacon and-egg sandwich,” he said. “In the past, you couldn’t find anyplace to park. Now people may be able to drive right up to the door.”
‘SLOW-MOTION CLOSURE’
The story of Whirlpool in Fort Smith demonstrates how jobs - especially manufacturing jobs - have surged and declined across much of the nation over the years.
Whirlpool’s predecessor, Norge Co., opened its Fort Smith plant in 1962 to make refrigerators, freezers and air conditioners. Whirlpool bought and expanded the facility in 1968. As the U.S. housing market boomed, side-by side refrigerators became the facility’s staple product.
Whirlpool’s Fort Smith work force peaked in August 2005 at about 4,600. At the time, manufacturers employed about 28,500 workers in the Fort Smith area, according to UAFS’ Center for Business Research and Economic Development.
Manufacturing was the single-biggest sector of the local economy.
But as manufacturing jobs fled the United States, Whirlpool’s Fort Smith plant “has been like a slow-motion closure,” said Kermit Kuehn, the center’s director.
Its work force dropped below 4,000 in 2006, after the company opened a plant in Ramos Arizpe, Mexico. Several more layoff announcements followed. By 2009, the number of employees had dwindled to 1,450.
The losses reflect a trend in Fort Smith. Manufacturing-sector employment in the city’s economy has declined by one-third since 2005, according to Kuehn.
An estimated 9,800 manufacturing jobs have been lost.
MAKING ENDS MEET
Nemeth, 47, knows more than most people do about the jobs that will be lost when Whirlpool closes. Nemeth went to work at the Fort Smith appliance factory at age 18 and has spent time working “flat on the line shooting screws.”
Still a company employee, he’s now president of the United Steelworkers local union and has been in that position full time for more than three years. He’s trying to help about 800 hourly workers plan their futures.
“My job will be eliminated June 29, just like everybody else’s,” Nemeth said.
Settlage said it’s hard to predict what will happen to displaced Whirlpool workers.
The average age of hourly workers at the plant last year was 53, according to the union. Those who are close to retirement may be able to leave the work force, Settlage said. So unemployment numbers may not soar immediately after the plant closes, she said.
The Fort Smith metropolitan area’s unemployment rate was 7.3 percent in April, according to data from the Arkansas Department of Workforce Services, down from 8.2 percent a year ago.
Arkansas’ rate was 7.2 percent for April.
Some salaried workers have been offered transfers to other Whirlpool plants. If they move, they won’t be included in Fort Smith’s unemployment numbers, but their departure will hurt the local economy because they’ll take their salaries and tax payments with them.
Whirlpool’s hourly workers weren’t offered transfers, Nemeth said. They’ll have to find other employment.
Married and a father of three, Nemeth had thought about retraining in heating and air conditioning. But after reading a college catalog, he has decided to look at other possibilities too.
Like all Whirlpool hourly workers, he will get $6,000 in severance pay and a three month extension of health insurance. He’ll likely be eligible to receive unemployment payments.
“I’m a long way from retirement. I’ll find something else,” Nemeth said last week. “As long as I can feed the kids and get the taxes paid, we’ll be all right.”
“I grew up on beans, fried potatoes, eggs and salt meat. I’ll make it work.”
DEPENDENT ON WHIRLPOOL
Huntington Foam LLC of Fort Smith is a Whirlpool supplier that will close along with its biggest customer in the region.
The company opened its local installation in 2001 to provide custom-molded foam packaging for Whirlpool appliances. It expects to close in mid-July and lay off its remaining skeleton crew, according to company President Gary McLaughlin.
Ramos joined the company about six years ago and worked his way up to management. The Peru native had a chance to transfer to another Huntington plant, but he wants to stay in Fort Smith.
He plans to look for another job in the area and is thinking about going back to school.
He said he’ll cut his spending in small ways and doesn’t think that will be too difficult, but big purchases will be out of the question.
“I had hoped to buy a house,” he said. “That will have to be postponed.”
In assessing the wider impact of Whirlpool’s closing, economist Settlage looks at two areas.
One is plants such as Huntington Foam that provide products or services to the Whirlpool plant. They include wholesale trade, plastics, motor manufacturing, truck transportation and even employment services.
Her model estimates that 600 jobs will be lost over several months and years.
“All those companies have a direct relationship with Whirlpool,” Settlage said.
Huntington Foam’s south Fort Smith operation is already nearly empty.
“It’s sad to see that here we are with a skeleton crew of five to six people, where we were one time at 60 to 70 people and running 24/7,” said McLaughlin, who works at the company’s headquarters in Jeannette, Pa.
But his company volunteered to support Whirlpool until it closes, McLaughlin said.
“When the times were good for them, they were good for us,” he said. “So we decided to stick it out to the end and support them during their not-so-good times.”
A CHAPTER ENDS
The other area that will suffer is businesses whose livelihoods depend on the paychecks of Whirlpool workers and related-company employees, Settlage said.
That includes restaurants, gas stations, clothing and discount stores, car dealerships and real-estate firms.
Bill Yowell, owner of Cavanaugh Barber Shop just a couple of blocks from the Whirlpool plant, says small business owners in his neighborhood know they will likely be hurt after June 29.
But it’s hard to know by just how much.
“Anytime you shut a company with 900-plus people,you’re going to be affected,” Yowell said. “It’s going to be a sad day for the whole community.”
Settlage predicts that 400 jobs indirectly tied to Whirlpool paychecks will be lost.
But those job losses are the toughest to calculate, she said.
“Take a restaurant that closes,” she said. “Is the reason they went out of business because Whirlpool employees no longer go on their lunch hour? It’s harder to pinpoint the reason.”
Just down the street from Yowell’s barbershop, Pic-N Tote convenience store manager Felecia Ames said traffic at her store has slowed in the past 18 months as Whirlpool’s work force has dwindled.
The store has 10 employees. She hopes store layoffs won’t be needed but knows that’s impossible to predict.
“Our business has especially slowed in the early mornings, when Whirlpool employees would stop for breakfast on their way to work,” Ames said. “And they’d cash their payroll checks here. There would be a line. And they’d buy gas, or buy lunch.
“Now they may not have paychecks to cash,” she said.
The UAFS Center for Business Research and Economic Development expects the pain of Whirlpool’s closing to continue for some months.
Kuehn expects a net job loss in the area this year, even though some smaller companies are hiring.
“They can’t immediately replace the gap that Whirlpool leaves,” he said.
But he emphasized that the economic picture in the River Valley area is not all bleak.
Fort Smith has seen several planning groups form in recent years that are working to reinvent the local manufacturing economy.
They hope to transform it, Kuehn said, into a more diverse economy rooted in advanced technologies, transportation and support services.
A regional transportation authority wants to build a modern shipping port on the Arkansas River. Chaffee Crossing, a mixed-use residential, commercial and industrial development, is one of the state’s bright economic development spots.
An eight-county regional alliance has formed to coordinate development efforts. And a new regional council of Fort Smith business executives hopes to emulate the development success of the Northwest Arkansas Council.
“Now that Whirlpool’s finally closing, it gives the community a chance to look forward,” Kuehn said.
“You have to say OK, that chapter’s closed. Now it’s time to focus more on what we want tomorrow to look like.”
But reinventing a local economy is “long, it’s slow,” he said. “It takes decades.”
“A manufacturing town losing a big manufacturer,” Kuehn said. “It’s huge.”
Front Section, Pages 1 on 06/17/2012