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Iowa Economic Status Report: Forest City

posted on April 9, 2009 at 3:05 PM

The global economy has been hammered by the financial crisis.  Investor confidence has been whipsawed and money to finance business and consumers alike has tightened, despite historically low interest rates.  The timidity of investors and consumers has caused economic activity to slow and that in turn has discouraged investment and purchases – a vicious cycle.

The effectiveness of massive government interventions, both here and abroad, is still in question.  In the meantime Iowa communities, microcosms of the state and national economies continue to adjust, waiting for signs of a turnaround.

For example, Forest City, a town of 4-thousand, the center of a once prospering region, is now experiencing the effects of the economic downturn.  Two of the area's largest employers have been hard hit.  The financial ills of Winnebago Industries and Waldorf College have effected every sector of life and commerce in an area of the state burdened by some of the highest unemployment rates.      

Big is better in north Iowa. If not the big machinery in the farm fields, it’s the big motor homes that roll off the production line in Forest City.  In its 50 years of its existence Winnebago Industries’ grown from a modest start to and industry leader.

Beth Bilyeu: “They catch cold, we get pneumonia?  Its made life a little bit different for us. We’ve been through this before.”

The economy is on the mind of many in Forest City. Residents of Winnebago County seat in North Iowa are watching reports of conditions across the country and anticipating what the trends means to their community and region.  Many are eyeing the economic reports about Winnebago.  Ninety percent of the plant is located in Hancock County which now has one of the highest unemployment levels in the state at 9.1%.  In February or 550 workers, close to a three-fold rise from a year earlier. 

Kelli Harms: Public Relations Winnebago Industries: “We have a large base of employees and the employees mean as much to us as we mean to them.  It's ah reciprocal relationship because obviously we have to have great employees to build the products that people love to drive and to enjoy the lifestyle.  So, Winnebago is really important to the community and we know that the community relies on us as well.”

The motor home maker hit the high water mark for employment just five years ago.  In 2004 the company was having trouble finding workers to fill its 42-hundred member workforce. 

The plant is still in operation, but is holding its staffing to 17-hundred. It has adjusted work schedules a four day work week,. and most recently had to furlough employees.

Winnebago says the company has a strong balance sheet with no debt.  All the motor homes that are manufactured have already been purchased – a lesson learned from previous downturns that burden the company with a high inventory of unsold vehicles..

But Winnebago says many factors remained stacked against them.  First High gas prices stalled sales, then the credit crisis slowed demand.

Kelli Harms: “People are going to their banks and they can't get money to buy large discretionary product, and it seems like once we get maybe one thing figured out then something else comes up -- interest rates, the housing crisis, you know there's just a bunch of things that are just out of our control, but they're affecting consumers.  So, consumer confidence isn't there.” 

The CEO calls this current slump the worst he’s seen in the 40 years he’s been with the company.  But the manufacturer is not the only victim of the times. 

Just off the main square of Forest City sits Waldorf College, right in the middle of town and the square since 1903.  The near 600 students here are receiving a liberal arts education that now has a heavy emphasis in real-life economics.

Dick Hanson/President, Waldorf College “Money, money, money.”

President Dick Hanson knows the elephant in the room is affecting everyone on campus.

The economic decline has caused parents and students to seek lower price options. The downturn crisis has also altered the market for student loans and other programs that finance college. 

For its part the school has halted an expansion of the faculty and staff.   In fact college leaders are now making cuts to operations.. 

The school has also contacted alumni about the severity of the financial problem.  It wanted to raise both money and awareness of the situation.  But success was limited, and Waldorf was forced to seek an alternative.   It will enter into a collaborative partnership with Columbia Southern University, an online-only institution based in Alabama.

Dick Hanson: “We wanted to be able to maintain our programs and our staff and our faculty, preserve jobs, preserve our place in the community.  I mean ah we bare some responsibility in Forest City.  I mean we're a thirty million dollar operation in their gross domestic product.  I mean ah you can't just shut the doors and walk away.”

Local economic development officials too, are trying to keep other businesses operating and to encourage the development or location of news ones. 

Beth Bilyeu: Executive Director, Forest City Economic Development: “It would be devastating.  If - if they were to close.  Life without Waldorf in Forest City would be sad on several aspects.”

Bilyeu and others in economic development see right now as an opportunity.

Beth Bilyeu: “We have available workforce. If somebody is looking to open a business or to do maybe even sublet manufacturing out to Winnebago, we have an excellent workforce in this are that is very well skilled, very well trained, and we’re open for business.”

Diversification is something Iowa had to embrace following the farm crisis of the 80s.  Local economic development officials are looking for small businesses that fit the community and could fit into Winnebago’s business.

Beth Bilyeu: “Winnebago remember is a small business that grew up in this area, and they've done pretty well.”

The hope is through better branding the community can give existing businesses and develop new industries. including wind power, food processing and advanced manufacturing.

Pat Galasso: Grow Forest City Project Manager: “Loyalty of the community is um very noticeable. You cannot do this just by city government and you cannot do this just with a handful of large industries that's in your area.  You need everybody and um -- Well, not only to be on board but to help you get through it.”

Tags: economy Forest City Iowa


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