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U.S. Economy - How Does the Financial Crisis Affect Iowa?

posted on October 30, 2008 at 5:00 PM

In the past few months the nation’s economy has been hammered by a financial crisis that has tightened commerce around the world.  

The visible effects include lay-offs, a delay in planned business expansions, a fall off in retail sales and an investment climate that has scared the socks off shareholders.

The effectiveness of massive government interventions, both here and abroad, to prop up financial institutions is still in question. But in recent days talk of economic depression has ebbed. Ironically the market today was heartened by news the economy in the third quarter had contracted less than expected.  

In recent years some Iowa communities have endured dark economic times, and now find themselves on the road to recovery.  A case study in resiliency is the city of Newton which a few years ago lost its main employer. 

More than a century ago Maytag began to take root in Newton, Iowa, growing into the community’s largest employer.  The town faced its own economic crises when Maytag closed its doors.  At its peak the company employed 4,000 workers in a community with a population of some 16,000.  The loss took an emotional toll on the workers and the community at large.

The plant's closing triggered a response from Newton’s leaders that has helped draw new industries to the community providing jobs and a fresh outlook towards the future.

Craig Hamilton: "People then realized that maybe this was an opportunity that we could look at being more diversified."

Chaz Allen: "There's four E's we work on.  There’s employment, entrepreneurship, there's education and there's entertainment and we want that to be the focus of our community."

The Iowa Speedway, one of the first and most visible developments following the close of Maytag, bolstered sagging spirits.  It meets the entertainment component of Newton’s transformation.  Development surrounding the Speedway includes: two new hotels, one just breaking ground; a new Travel Plaza; and possible expansion of the airport.  

Chaz Allen: "Next year we have the nationwide series from NASCAR that will be here and they're anywhere from 55 to 70 thousand people will come through Newton for a weekend."

On the heels of the Speedway, the city was developing a new manufacturing base.  The empty space that was formerly known as, Maytag Plant 2, was a resource that helped the city in its efforts to create jobs.

Craig Hamilton: "We had about two and a half million square feet of existing space on the north side of town.  We got to see some projects that most communities would not see because they just don't have that space."

Trinity Structural Towers is renovating a portion of the space to produce wind turbine towers.  It is anticipated the facility will employ 140 workers.  The location of the facility is enhanced by its proximity to an interstate highway and to installation sites.

Craig Hamilton: "A lot of wind turbines are going up in the north central United States and because the pieces that make up these turbines are relatively big, transportation costs are huge factors.  So they tend to locate the manufacturing near to where the final turbines are going to be installed." 

A second wind industry manufacturer, TPI Composites, decided to construct a new wind blade production facility in Newton.  TPI has made a commitment to provide 500 jobs with the potential of adding 300 more positions.  Governor Culver, an advocate for making Iowa a renewable energy capitol attended TPI’s Grand Opening on September 16, 2008.  It took more than just Newton’s location to draw wind industry to the community.  It also took the willingness to create partnerships and work out financial incentives. 

Craig Hamilton: "The agreements were always a four way kind of a thing between the state and the city and the county and TPI and we had to get pretty creative and we really couldn't have done it without the help of all the groups working together."

Financial tools including the state’s Economic Development Set-Aside and Tax Increment Financing were implemented with the belief the long-term benefit would out-weigh the initial costs.

Chaz Allen: "Payroll at TPI you're talking a first initial payroll of 15 million dollars a year.  These are 21st century jobs, that as the wind industry expands and they diversify energy that we're on the front line right now."

A new bio-diesel plant and growth in the telecommunications industry has also added new jobs to Newton. 

Craig Hamilton: "We've probably increased employment in Newton planned and projected by about 1400.  So we're making some progress."

The completion of renovations to a portion of the former Maytag headquarters near Newton’s down town will offer educational enrichment.  

Craig Hamilton: "Those two buildings at the other end of the complex were given to DMACC to renovate and create an expanded career academy both for the high schools and for more adult continuing education in the evening hours as well.  So that's going to be a tremendous asset to the entire region once that gets done." 

Tags: economy finance Iowa Maytag Newton


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