Prolonged woes reshape Connersville, city once known as ‘Little Detroit’

CONNERSVILLE—Taking a sledge hammer to a car might seem like an illogical way to protest a tax hike on tobacco.

But it sure feels good, especially to people
who are stuck inside the economic pressure cooker that is Connersville. So on April 1, the day a 158-percent
increase in the federal cigarette tax took effect, Jeff Herbert hauled a flood-damaged station wagon
onto the parking lot of Miller’s Discount Tobacco and invited his customers to let loose.

"Everybody was grabbing a sledgehammer and waling on it," Herbert said proudly.

The cigarette shop sits next door to one of
the busiest unemployment offices in the state. Fayette County’s jobless rate tipped into double-digit
territory long before Elkhart’s 18 percent grabbed headlines and drew a presidential visit.

Visteon Corp. closed its cooling-systems factory in this east-central Indiana city in December
2007, putting 890 people out of work. More than half those workers are taking advantage of a federal
program to train for new jobs, but the broader recession is frustrating efforts to get lives back on
track.

Unemployment in
Fayette County rose from an average 7.2 percent to 10.7 percent in 2008. In February, the jobless rate reached
14.7 percent.

With economists
predicting the statewide average will reach 10 percent this year, the experience of a hard-hit city like Connersville
offers a glimpse of what lies ahead for other manufacturing-reliant Hoosier communities.

"As you move higher and higher into double digits, that is absolutely when you start seeing
more spinoff effects," said Carol Rogers, deputy director of the Indiana Business Research Center.

The side effects show up in the kind of tobacco
Herbert’s customers buy, for example, and in the line that forms outside a free health clinic downtown.

"When people talk, they talk about survival,"
said Dan Valentine, a 55-year-old former Visteon employee. He stopped at the cigarette store before heading
to work at a manufacturer in nearby Rush County, where he makes $10 an hour as a temporary employee.
"In the old days, they talked about vacations."

Fayette County, population 25,000, has ranked among Indiana’s top three counties in terms of unemployment
since 2001, and it had the highest annual average in 2006, 2007 and 2008.

To be sure, this city’s root problem is dependence on the automotive sector, and that industry’s
long-term employment decline. Connersville, the county seat with a population of 14,000, was nicknamed
"Little Detroit."

One of the top employers was Ford Motor Co.’s cooling-systems subsidiary, spun off as Visteon in 2000. The number of workers
at the air-conditioning component plant on the city’s west side peaked at 3,500 early this decade.

Although the work force shrank drastically by February
2007, when Visteon announced it would close the plant, it still represented one-third of the manufacturing
jobs in the county.

"Because
the manufacturing sector was so important to that county," Rogers said, "any changes in manufacturing would show
up there."

Endangered
middle class


Manufacturing jobs like those at Visteon created a middle class, which is disappearing from towns throughout the Midwest,
said Kyle Anderson, a visiting economics professor at IU’s Kelley School of Business. "A lot of these jobs pay extremely
well for the education level and skill set."

Visteon jobs were the highest-paying in Connersville. Represented by IUE-CWA, assembly workers
could earn $22.75 an hour, and those in skilled trades pocketed even more. Health insurance and paid
time off pushed the value of the jobs up to $48 per hour, former union officer Dale Bloom said.

Bloom is one of 573 former Visteon workers who
are taking advantage of a federal retraining program. He’s working on an associate’s degree in computer
technology, and hopes to find a job designing parts.

"If I can get out and get a job at $15 an hour, I’d be fortunate," the 44-year-old father
of four said.

Lower wages
will have as much impact on the local economy as unemployment, Anderson said.

"You’re going to see it in every sector because these are people who have been driving relatively
nice cars," he said.

Limping along

Visteon employees began bracing themselves for layoffs in the early 2000s.

"The biggest thing you would notice, when it first started going down, was the number of
homes for sale," said Gary Frank, a Visteon maintenance supervisor who transferred to the Ford steering-systems
plant in Indianapolis. "Then they’d rent a place, so they wouldn’t get stuck."

Frank, 50, considers himself lucky to have sold
his house in the countryside soon after Visteon notified him that his work in Connersville would end
in November 2007.

His
former co-workers are stuck. Most of those who’ve found new jobs commute long distances. One drives to Muncie, 45 miles
to the north, to work at Wal-Mart.

Others are still looking.

"Used to, you could drive to Richmond and get a job, or you could drive to Cincinnati and get a job," Frank said.
"There’s not too many of ’em out there."

Discount shopping


Connersville’s persistent unemployment isn’t obvious at first glance. Restaurants,
including Mousie’s, an old Visteon watering hole, are still open. But the newer retailers in town, Family
Dollar and the grocery chain Save-A-Lot, are deep discounters.

At Miller’s Discount Tobacco, Herbert noticed about three months after Visteon’s closing that
more of his customers started rolling their own cigarettes. Loose tobacco was cheap—just $5.89 before
the federal excise tax increase.

Any item he marks down flies off the shelves.

"People are just trying to make their dollar go farther," Herbert said.

Every other Thursday evening, a line forms outside
First United Methodist Church downtown, as people wait for one of 20 slots at a free health clinic.

Joanne Guttman, a family physician who owns
a rural health clinic in adjacent Franklin County, started the clinic with a group of volunteer doctors
and nurses 3-1/2 years ago.

"A lot of people would come to our office and had no insurance, no way of paying," she said. "We’re only there
twice a month, so it makes a small dent."

Guttman said the rise in uninsured patients has tracked the area’s overall decline in factory
employment. The free clinic is treating people who work, but without health insurance can’t manage chronic
injuries or disease, like diabetes or asthma.

Volunteer Ava Moore said Visteon’s closing is just starting to have a noticeable impact on the
clinic. With a limited number of doctors, she can admit only 20 or 25 people a night.

"It’s sad. It’s really sad," she said.
"You get to the end of the line and you see 20 more people, and you know they’ve been standing in
line for an hour."

Delayed effect

Extended unemployment pay and free education have cushioned the blow to the regional economy.

Visteon shipped the Connersville jobs to Mexico and Portugal, so its employees qualified for Trade
Adjustment Assistance. The U.S. Department of Labor program provides at least 52 weeks of unemployment
pay for workers who enroll in an approved retraining program. The benefits can extend another year if
a worker is pursuing a two-year degree, which is the maximum amount of education the program covers.

The unemployment pay is equivalent to what one
would receive under their state’s program. In Indiana, the maximum payout is $390 per week, or 54 percent
of a $37,000 salary.

"The
most positive thing I’m going to get out of this is an education," said Mona Rowland, a 46-year-old who’s making straight
A’s at Indiana University East in Richmond.

Rowland intends to stay in school after her benefits run out and get a bachelor’s degree in social work. Many of the women
she knew from Visteon are retraining to work in health care, while many of the men opted for the quickest route back to the
job market—truck driving or operating heavy equipment.

With the whole region sunk in recession, even those newly minted, retrained workers struggle to
find work.

Rowland worries
about what will happen to Connersville if state legislators fail to fix the bankrupt unemployment insurance
fund.

"They need
to come and see these little communities that are surviving mainly on unemployment," she said.

Shrinking tax base

The worst may be yet to come for
local government.

The
1.8-million-square-foot factory, which workers called "the blue zoo," provided $3.6 million in tax revenue to Fayette
County in 2008. The bulk of Visteon’s tax bill, $3.2 million, was attributable to equipment, which was auctioned off early
in 2008.

City and county
government will begin bearing the brunt of the eroding tax base when property tax bills are paid later this
year.

"It’s just
going to significantly impact Fayette County—cripple us," County Treasurer Debbie Kidd said. "They are by far
our biggest taxpayer."

Connersville’s share of the loss is $1.7 million, Mayor Leonard Urban said. So far, City Hall has
avoided layoffs. But the municipal water utility, to which Visteon provided $850,000 in revenue, has
cut six employees.

Urban,
a funeral home owner and former city councilman who was elected mayor in 2007, plays down the effect on city services.

"We saw this coming, and we were prepared,"
he said. "We’re facing it, and we’re surviving."

He’s been saving money by not replacing retiring police and firefighters. He boasts about pinching
pennies on contracts and equipment.

"I’m a cheapskate," he said.

But to keep the city’s $13 million budget in balance, he will try to trim $500,000 this year.

At the same time, Urban is throwing every incentive
he can find at Carbon Motors, an Atlanta-based startup that’s considering using the former Visteon plant
as a factory to build a police super-car.

What’s next?

Speculating about what might be next for the vacant, sprawling factory is the pastime du jour at Mousie’s. The darkened restaurant
and bar was the factory watering hole for 55 years, and its new owners are three ex-Visteon employees.

Co-owner Rick Kurz, 52, always had planned to
buy a restaurant in his retirement years. Visteon’s closing forced him to make the decision seven years
early—and without the safety net of a full pension.

His leap of faith has worked out so far. He chalks up the restaurant’s success to a menu that
suits Connersville budgets ($1 drafts, Monday through Thursday), and keeping the same friendly servers.

"People just come here," Rick Kurz
said. "All we had to do was just go in, and not mess it up."

Because Kurz took over Mousie’s three months after the Visteon plant closed, he knew he couldn’t
rely on his former coworkers as customers. He said he’d found that Visteon people occupied only about
10 percent of the seats on a given day, anyway.

"Even with the economy the way it is, it’s been better than we could hope for," he said.

But life has not been easy for the restaurant
owners or their customers. Kurz’s wife, another former Visteon worker, is one of the many who are back
in school with Trade Act Assistance.

They’re adjusting to life with minimal health insurance. Kurz said his former coworkers seem to be finding work at small factories
in the region, Honda in Greensburg, or in retail in Harrison, Ohio.

"I’ve got one friend that drives to Dayton," Kurz said. "That’s where he got a
job. He couldn’t sell his house, so he commutes every day."

Kurz finds encouragement in the community’s ability to make ends meet.

"Everybody thought losing Visteon would be
pretty much the death of our little town," he said. "People have proven to be pretty resilient
so far."

Please enable JavaScript to view this content.

Editor's note: IBJ is now using a new comment system. Your Disqus account will no longer work on the IBJ site. Instead, you can leave a comment on stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Past comments are not currently showing up on stories, but they will be added in the coming weeks. Please note our updated comment policy that will govern how comments are moderated.