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Officials: Impact of jobs loss on local economy uncertain

Officials: Impact of jobs loss on local economy uncertain

August 4th, 2013 in News

The Jefferson City RR Donnelley plant is located off Industrial Boulevard. With the company announcing the plant's October 2013 closure, city and state officials are scrambling to determine the impact on the economy and to find ways to help laid-off employees.

Photo by News Tribune

One day last week, Cole County lost about 1 percent of its workforce with the announced closing of RR Donnelley's plant in Jefferson City.

But the loss of about 500 manufacturing jobs in one fell swoop pales in comparison to the loss of Missouri state jobs over the past decade, local officials say.

"The state has lost 3,000-4,000 employees (in Cole County) over the last 10 years, but nothing as dramatic as this," said Randy Allen, president and CEO of the Jefferson City Area Chamber of Commerce. "They (the state) used to be about 18,000 state employees in Cole County. It's down to about 14,400 now."

In February 2009, RR Donnelley laid off approximately 200 employees in Jefferson City.

Allen said he doesn't see the recent round of layoffs and closing of the plant to have too much of an impact on area businesses and suppliers.

"It will have a small impact in terms of what they purchased locally, but the paper and printing supplies probably came from somewhere else," Allen said. "The biggest effect is just the loss of wages."

He said it's difficult to quantify the impact.

As an example, he said within the past five years, the chamber has been able to work with manufacturers to increase their employment by about 550 workers.

"We've worked pretty hard with them to increase employment at Unilever and Command Web and other kinds of manufacturers," Allen said. "This pretty well negates that. So, it is a significant impact."

City Administrator Nathan Nickolaus agreed that the city could take a slight hit with the loss of 500 jobs.

"Anytime you lose jobs, that will have a negative impact on the community in the sense that that would impact our sales tax and property tax," Nickolaus said.

He said city officials are waiting for more details about the closing of the RR Donnelley plant.

"We know it's 500 families that will be out of a job," Nickolaus said. "Obviously, they would not be spending as much money, which would decline the sales tax. It's very difficult to quantify exactly what that would mean."

Past closings in JC

Within the last 15 years, several Jefferson City manufacturers have ceased operation in Jefferson City.

A Jefferson City Maytag plant announced the phasing out of its wire harness department in 2000, resulting in the loss of more than 300 jobs by February 2001.

Following the 2001 closing, the chamber helped organize a free job fair in Jefferson City to assist the 300 Maytag employees seeking employment, as well as other locals seeking employment.

In February 2002, the same plant moved its remaining operations from 1535 Fairgrounds Road to Iowa, cutting 50 more Jefferson City jobs.

David Meyer, who was the vice president for economic development at the chamber in 2002, told the News Tribune at the time of the final Maytag closing that for most of the time Maytag was in town, the company was in the 200- to 300-employee range.

"And then, for a short time - about two years - they had gotten up to about 500 people before they moved the wire harness (production)," Meyer told the News Tribune.

Maytag once operated two plants in Jefferson City, but sold its facility on Industrial Drive in the 1990s.

Jefferson City Manufacturing, which produced heavy duty truck brake components, closed in March 2007. Forty-eight employees were laid off.

Missy Bonnot, director of economic development at the chamber, told the News Tribune at that time that, "This shows we need to work to diversify our local economy, and we hope to do that with our new strategic plan to try and bring in more jobs in the areas of manufacturing, health care, insurance and finance, and design and marketing services."

Johnson Controls, a Jefferson City plant that made seats for automobiles, closed its doors in 2008, laying off 120 employees.

When that closing was announced, Allen told the News Tribune he didn't believe the plant's closure would "have a "devastating' impact on the local economy," because the chamber is "doing things to encourage jobs to be added to our existing plants."

The future

On Friday, Allen said the chamber will proceed by entering into discussions with RR Donnelley.

"We are making contact with the corporate office of Donnelley to find out what the implications are, is there any way to save it, those kinds of questions," Allen said.

He said the first question will be, "Is there some other operation valuable to the company (RR Donnelley) that we could locate here?"

"I would say it's a long shot, to be honest," Allen said. "But, we need to offer them every possibility that we can. But, obviously it's a long shot to be able to put some other enterprise that they have currently on their books into that facility."

Allen said if those discussions prove fruitless, the chamber will work with the company to market the site, which he said is a prime location.

"People all the time are looking for larger buildings with rail access," he said. "We've never had one of those. We'll have to run those traps and find out a way to get that on the market if they (RR Donnelley) are not going to use it."

Allen said the chamber is also beginning the process of working with the state's Division of Workforce Development to put together a plan to assist employees in finding other opportunities.

Nickolaus said the city is waiting to get more information on how to proceed.

"It's certainly something we'll take into account in terms of figuring out what our estimations are for next year," Nickolaus said.

He said it's impossible to put an exact dollar amount on the city's loss.

"It's not like you can say that for every one job, you lose X dollars of sales tax," Nickolaus said. "It doesn't really work that way."