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US: Company Town Relies on G.M. Long After Plants Have Closed

by Jeremy W. Peters and Micheline MaynardThe New York Times
February 20th, 2006

General Motors once had so many plants here that it had to stagger their schedules so that the streets would not be clogged with traffic when the workday ended. At the city's peak, 35 years ago, one of every three people in Anderson worked for G.M.

Now there is not a single G.M. plant left, and just two parts plants that G.M. once owned still survive. Anderson, about 50 miles northeast of Indianapolis, had 70,000 people in 1970 and now has fewer than 58,000.

But in many ways, Anderson is still just as dependent on G.M. as it once was. Only now, rather than being dependent on General Motors, the corporation, it is dependent on General Motors, the welfare state.

The company's generous medical plans, prescription drug coverage, dental care and pension checks are a lifeline for the 10,000 G.M. retirees and an untold number of surviving spouses and other family members who still live in the Anderson area.

They in turn help to prop up the doctor's offices, hospitals, buffet restaurants and shopping centers that might otherwise vanish along with the G.M. plants around the city that are fast becoming rubble. Anderson's G.M. retirees outnumber its remaining auto manufacturing workers by nearly four to one.

"When we all die off, this city will die," Jesse Lollar, 83, said last week, as he finished an early dinner of lima beans and macaroni and cheese at the MCL Cafeteria in the Mounds Mall.

Other communities will start to look more like Anderson as G.M. carries out its plan to close a dozen factories and cut 30,000 blue-collar jobs by the end of 2008, in part by offering buyouts and early retirement packages. And Anderson will in all probability begin to look even grimmer as the company cuts back on its vaunted benefits.

"General Motors is more than just a symbol of American industry," said Gary N. Chaison, professor of industrial relations at Clark University in Worcester, Mass. "It envelops the towns where it operates, and people become dependent on it in those towns."

Three of those people are Mr. Lollar, a retired G.M. engineer, and his two brothers, Charles, 72, and John, 74, who are also retired from G.M.

Together, they share 112 years of collective G.M. experience, years that have been made comfortable by one of the richest retirement plans offered to working Americans.

But earlier this month, G.M. told its retired salaried employees and their family members that it planned to cap its health care expenses at the same level as in 2005.

It told them that if costs rise, as they are now at a rate of 9 to 10 percent a year, they could expect to pay more for everything from dental and vision care to prescription drugs and doctors' visits, with the full details to come later this year. Medicare could make up some of the difference for older retirees. (G.M. reached an agreement last year with the U.A.W. on a plan that would make modest cuts in hourly workers' medical coverage. The plan still requires court approval.)

"You just take it day by day," John Lollar said. "I just hope my benefits last longer than I do."

In Anderson, St. John's Medical Center, the city's biggest hospital, is already bracing for the impact of the changes. Over the past two years, 15 to 20 percent of its patients at any one time were G.M. retirees, a spokeswoman said last week.

At Community Medical Center, the other major hospital, 14 percent of the patients last year were retired from G.M.

Iva Hazelbaker, 96, who retired from her job on an assembly line 35 years ago, said that without G.M., "we'd be in a heck of a mess."

Ms. Hazelbaker, who walks with a cane but has a sprightly manner, does not see a very bright future for Anderson, her home for 40 years. "Young people don't stand a chance," she said.

Anderson's unemployment rate is 6.7 percent, near its peak for the last ten years and well above the national average of 4.7 percent. Even so, the figure is misleading, said Patrick Barkey, the director of economic and policy studies at Ball State University in Muncie, Ind., because many people here stopped looking for work long ago and are not captured in the numbers.

"I think it masks the state of the economy and understates the degree to which the job picture has worsened," Mr. Barkey said.

Across the country, about 80 other communities have lost more than a third of their auto manufacturing jobs in the last ten years.

A visit to Anderson, now a stripped-down shell of its former self, offers perhaps the starkest example of the damage that plant closings can do. Reminders of the once-mighty auto industry are everywhere: abandoned plants, a ghostly downtown and residents who speak with bewilderment and frustration about what has happened to the auto business.

Sharon Boone, 60, followed in her father's footsteps and started working at G.M. when she was 23, building ignition parts on an assembly line. She was eligible for a full retirement package after 30 years with the company, so she left in 1999.

Standing in the kitchen of the United Automobile Workers Local 662 hall, she pointed out an aerial photograph of Anderson from 1973. Parking lots around a dozen factories were jammed with hundreds of cars, creating a vibrant city within a city.

G.M.'s operations were "so big we even had our own water-treatment plant," Ms. Boone said. "Now the jobs aren't here, and the money isn't here."

Along with once being the country's biggest employer until it was passed by Wal-Mart in the 1990's, G.M. was a powerhouse when it came to benefits.

And even though G.M. stopped offering retiree health care coverage to new workers 13 years ago, it still covers 679,000 retirees, their spouses and eligible dependents — on top of the coverage it gives to 435,000 active workers. This costs the company an average of $5,000 a year per recipient.

Given the sheer number of people who will be affected, the impact of the company's health care changes will run far beyond those of steel makers, retailers, railroads and airlines that have already eliminated or trimmed the benefits that their workers enjoyed.

Earlier this month, G.M.'s chief executive, Rick Wagoner, expressed sympathy for those faced with paying more for their coverage. "When these benefits were conceived decades ago, no one could have foreseen the explosive cost inflation that we have been experiencing in recent years," Mr. Wagoner said.

Anderson once ranked right behind Flint, Mich., where one out of every two people worked for G.M. at the company's peak in 1978, as the city with the largest concentration of G.M. operations.

Back then, G.M. employed 22,000 people in Anderson making everything from headlights to horns; now only 2,600 jobs are left at a pair of auto parts plants, one of them owned by Delphi, which is operating in bankruptcy protection. The other is the Guide Corporation, a headlight and tail light maker that was once a unit of G.M. and is now for sale. Analysts have said the Delphi plant could soon be closed or sold.

Across the street from what was once a vast G.M. manufacturing complex on Anderson's industrial east side is the former White Corner bar, one of Anderson's most storied factory taverns. Now called Stanley's, it is still open for business, but patrons are hard to come by.

"You used to have to wait for someone to get up to get a seat," Naomi Scales, the 69-year-old daytime bartender, said one recent afternoon as a lone customer sat in the back of the bar, sipping a soda. "It's just not fun anymore."

The city's dependence on retiree income is a major concern for the mayor, Kevin S. Smith, who said Anderson must attract new jobs if it is to survive. That is why he has gone as far as Japan and is planning a trip to China to look for investors, armed with multilingual business cards.

"We realize those retiree pensions will not be here in the coming years," Mr. Smith said. "That's why it's important that we are involved in new job creation that will employ the younger people now, too, and keep them in our community."

Yet there were few young people at the tables of the MCL Cafeteria last week. Its manager, Dan Cantrell, said about a third of his business came from G.M. retirees like the Lollar brothers.

With specials like a $4.49 all-you-care-to-eat fish fry on Fridays, the MCL is a favorite of Anderson's elderly, who receive a 10 percent discount in the afternoon.

Their spending is "still a lot of the economy," Mr. Cantrell said, referring to the retirees.

And Anderson can never hope to find anything as big, or as generous, as G.M. to provide its economic backbone. "There's not really another major manufacturing plant, anything, that could supplement a city's income the way G.M. did — and still does," Mr. Cantrell said.

Eventually, the retirees whose G.M. benefits are helping to prop up this place will be gone as well. As Jesse Lollar, the retired G.M. engineer, put it: "We're going to turn the lights off when we leave."



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