Last Friday, Ford stunned the 2,640 workers at its Hazelwood plant by naming it one of five to be shuttered in a restructuring plan that will eliminate 35,000 jobs worldwide. The plant is to be closed somewhere around the year 2005, officials said.
St. Louis is no stranger to depressing business news of this ilk, what with civic gut punches at TWA, McDonnell Douglas/Boeing, Ralston-Purina and Monsanto sounding an ominous drumbeat of job loss in the region. This story is getting old, and so, one fears, is St. Louis itself.
But the Ford closing can't be dismissed as just another case of local depression TV. It's unique not only because of what it could mean on the economic downside but -- conversely -- because it may be the catalyst for positive change.
These are no small potatoes. The 2,640 jobs average $62,500 per year, or $165 million, the city of Hazelwood reports, and the Regional Chamber and Growth Association reckons Ford is one of the 15 largest economic generators in the region. That's nothing to sneeze at.
However, it's not quite hand-wringing time. The deal isn't officially done. And even if it happens, it may be attributable more to the woes of one struggling company than to some truths of globalization signaling that corporate St. Louis is doomed to become an oversized Wal-Mart.
On the plus side of the St. Louis balance sheet, the proposed plant closing hardly seems related to the performance of the Hazelwood plant and its employees. Even though it's an older facility, dating back to 1948, the plant was ranked fourth of 41 truck plants nationally in a recent productivity study by auto-industry consulting firm Harbour and Associates of Troy, Mich.
Laurie Felax, Harbour vice president, told me that the decision to close the St. Louis plant apparently came from the company's belief that sales would decline for the Ford Explorer, the popular sport-utility vehicle produced at Hazelwood and another plant in Louisville, Ky. There had been speculation the Louisville plant would close, but because it produces more vehicles -- 290,000 to St. Louis' 203,000, Felax says -- it survived the numbers game.
"I think this is an admission by Ford that the competition in the midsize-SUV market is getting stronger and they're not sure they'll have the same level of volume of Explorers in three to five years," she says.
"If they were going to consolidate the volume, they decided, it couldn't be in the smaller plant in St. Louis."
Felax also says Ford is relatively inflexible in moving different models from one plant to another because of the cost and time involved. This, too, worked against St. Louis, narrowing the odds to almost nil that Ford would keep Hazelwood open to crank out a different breed of automobile.
In a sense, that's good news. If the impetus for the planned plant closing was unrelated to the facility itself, the work ethic of its employees or to regional issues, there's more reason to hope for an alternative.
There are at least five possibilities in play:
Possibility No. 1: Ford is bluffing and just wants to extract government favors and concessions in exchange for "rethinking" the closing. One should always begin with an unfounded conspiracy theory, so it should be noted that Ford didn't have to be so indefinite about its plans for a "mid-decade" closing. Also, a Ford executive was seen on the grassy knoll.
Possibility No. 2: Our politicians will show up at Mr. Ford's doorstep, make a Jimmy Stewart appeal and cause the industrial plutocrat to change his mind. Gov. Bob Holden has already announced plans to go to Detroit. Expressions of support for the plant have poured in from the region's congressional delegation. The RCGA notes that Delaware officials in 1992 persuaded GM to reverse a similar plant-closing decision there. It's a wonderful concept, but it's likely to become reality only if Ford officials discover that they forgot to check their own sales projections, production costs and a thousand other factors before making their decision. In the unlikely event that the politicians are successful with their appeal, see Possibility No. 1.
Possibility No. 3: Another automaker will buy the plant from Ford and bring in a new operation. Felax notes that new plants for imports have sprung up in recent years -- Nissan in Tennessee and Mississippi, Honda in Alabama, Toyota in Kentucky, Mercedes-Benz in Alabama, BMW in South Carolina. On the other hand, there's the worldwide problem of overcapacity. Go figure.
Possibility No. 4: Another industry can be enticed to take over the plant. RCGA president Dick Fleming cites the example of London-based GKN, an aerospace company that bought a Boeing facility here, saved 800 jeopardized Boeing jobs in the process and ended up adding another 400 jobs. Given the proven viability of the Hazelwood facility, this sort of outcome might be St. Louis' best hope.
Possibility No. 5: Nothing happens. The plant closes and the old facility sits vacant, as useless as some 35-year-old baseball stadium.
That's the worst case. The Ford-plant closing is about more than jobs and economic impact: It's a real test of whether an old manufacturing-based city can handle the adversity posed by a new economy.
It's a grim fiscal game, and it's worth keeping score in Hazelwood.