NEWS for North Dakotans
Agriculture Communication, North Dakota State University
7 Morrill Hall, Fargo, ND 58105-5665
August 19, 1999
How does a rural community respond to the closing or downsizing of a major employer? What factors influence how effectively communities respond to a loss of jobs? Can small communities adjust to an economic blow and preserve their economic base?
A report published by the Department of Agricultural Economics at North Dakota State University analyzes the experiences of five communities that recently experienced the downsizing or closure dilemma. The authors, F. Larry Leistritz, professor of agricultural economics at NDSU, and Kenneth A. Root, professor emeritus of Luther College, selected the five communities as case studies to evaluate the approaches communities have used to restore economic vitality and the factors related to how effective these efforts were.
The communities selected for the study were Bowman and Grafton in North Dakota and Altura, Courtland and Worthington in Minnesota. The study communities ranged in size from Altura with fewer than 400 residents to Worthington with about 10,000. Proximity to larger cities varied, with Altura and Courtland within relatively easy commuting distance of larger cities while Bowman is 85 miles from the nearest city of 10,000 or more people and 150 miles from the nearest metropolitan area. Each of the five cities had experienced the closure or downsizing of a major employer between July 1994 and January 1998, but the effects of these events and how the cities responded to them differed substantially.
Generalizing the experiences of the five communities, Leistritz and Root found that communities tended to make a better adjustment to a loss of employment when they had:
Altura, Minn., lost over 200 jobs when a turkey processing plant in the town was closed down. Most of the work force commuted from the surrounding area, some from as far as 60 miles away, so comparatively few residents were directly affected. However, the closing had an impact on local businesses and on the cost of maintaining city utilities. It has taken some time for the city to develop a response to the closure. Unique features of the plant have made it difficult to sell to another tenant. Possibly, say Leistritz and Root, the city could have worked more closely with the state development council or retained a consultant to help locate a buyer for the facility.
Bowman, N.D. and surrounding smaller communities in Bowman and Adams counties were affected by the closure of a coal mine. The mine employed just 53 workers, but the excellent pay and benefits of the mine jobs meant a greater economic loss to the area economy than the number of jobs would suggest. Mine workers were offered transfers out of the area to other jobs within the company, which most accepted. Local officials don't envision dramatic impacts from the closure, but the losses of tax revenue, mine payroll and workers and their families add to the challenges of maintaining local businesses and public services in the face of declining farm numbers and decreasing rural population. A jobs committee was created with a federal grant and several projects have been funded, but the Bowman experience shows that recovery and development efforts can take considerable time to show results. It may be unrealistic to believe that a community response can generate new jobs in time to prevent relocation of displaced workers, say Leistritz and Root.
Courtland, Minn., experienced closure of a commercial company's livestock research farm located on the edge of town. Most of the 30 displaced farm workers were not Courtland residents and were quickly absorbed into the area work force. Courtland is located near a larger city with extensive labor needs. The closure has had limited economic impact but has contributed to an emphasis on planning future growth of the city.
Grafton, N.D., is home to the state developmental center, which employed about 1,040 full-time equivalent employees in the late 1980s. During the period from 1989 to 1995 the staff was downsized to fewer than 500 positions. This downsizing came at a time when the local economy was already under considerable stress from a declining farm economy. Adding to these woes, three major retail businesses announced plans to close, and a rash of fires affected other local businesses. The Grafton area's response to the downsizing took two forms--efforts to establish other uses for the developmental center facilities that were being vacated and general economic development efforts to establish replacement jobs in the area. Efforts of the community and development center staff have been successful in expanding the use of center capabilities by other groups, and unused center buildings are being rehabilitated as senior housing. Development efforts have been successful in attracting a new window and door manufacturing plant that is expected to employ 500 workers. Leistritz and Root say the most important thing to be learned from the Grafton experience is that it is possible to recover from a major employment loss, and that a closing or downsizing is not always the worst thing that can happen to a community.
In Worthington, Minn., a chicken processing plant operated by a major food company was closed, terminating 435 employees. This plant was not the city's only major employer-- it is also home to a meat processing plant--but the terminated employees represented 4.4 percent of total Nobles County employment. Top priority for local leaders was employment of the displaced workers to avoid their relocating and increasing the negative economic impact. Some even saw the closure as an opportunity to move in new directions and create higher paying jobs. A chief characteristic of the Worthington response, say Leistritz and Root, was that community agencies and resources pulled together. Turf issues disappeared, and the focus was on recruiting new industry and retraining displaced workers.
Leistritz and Root point out that while North Dakota and Minnesota currently enjoy very low unemployment rates, that does not mean all communities are doing well or that there are not difficult periods for workers displaced from jobs. A dynamic economy reflects the decline of some industries and subsequent job loss, while other industries and communities experience comparative stability and prosperity.
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Source: Larry Leistritz (701) 231-7455
Editor: Gary Moran 231--7865