Spring Hill, Columbia worry about life after GM
October 4, 2009
Spring Hill, Columbia worry about life after GM
By G. Chambers Williams III
COLUMBIA, Tenn. — Tom Smith opened the Video Shoppe in north Columbia a year after General Motors announced it would build a new Saturn plant in nearby Spring Hill.
To his delight, the automaker put a giant training facility right next door, and rentals of his movies boomed. "I had a good run because of it," he said.
But today, more than 20 years later, the South Central Tennessee Career Center has moved in next door, where unemployed people go to look for work.
"Their business is great, but mine is not," Tom Smith said. Maury County’s August unemployment rate was 12.4 percent, up from 7.9 percent a year earlier.
Already hit hard by the economic downturn, Tom Smith and other merchants in Columbia and Spring Hill, which have thrived on carmaking jobs for two decades, are bracing for more trouble as the auto industry shrinks.
GM will end assembly of the Chevrolet Traverse crossover utility vehicle at the plant in late November, moving the work to Michigan. The Spring Hill facility will then officially be on "standby," which means it could eventually get another vehicle, although nothing is certain, the automaker said. Separate talks to sell GM’s Saturn brand, which got its start here, also fell apart last week.
Towns are still optimistic
In the meantime, the shutdown will put about 2,500 GM employees out of work, along with an additional 1,000 or so who work for nearby GM suppliers.
Although about 600 GM employees at the facility will continue building engines — and 110 workers will keep handling the national Saturn parts and distribution operation, at least for now — the big drop in employment will hit the community hard, said Columbia Mayor Bill Gentner.
"When I came here in 1988 as city manager, I told members of the council that they needed to be prepared for an exit strategy at some point, as GM is known for leaving towns," he said. "Little did I know that we would be talking about less than 30 years."
Sales tax revenues for both cities and Maury County are expected to decline, although probably not significantly for at least a year or two, said Spring Hill Interim City Manager James Smith.
That’s because most of the GM workers will continue to draw about 80 percent of their current pay for the first year after being furloughed, and 50 percent during the second year.
After that, though, their money will be gone, and so will the sales taxes they contributed to the local governments, he said.
"I’m still optimistic GM is going to bring something else here," James Smith said. "The big question is when. My best guess is that after the second quarter of 2010, economic conditions will improve nationally, people will start buying cars again, and GM will need this plant."
But GM or no, the region will survive, as it did when the giant Monsanto phosphate plant in nearby Mount Pleasant closed in 1986, Gentner said, leaving the area with 22 percent unemployment.
As for this latest blow, "We are still looking for ways to lessen the impact," he said. "It’s going to be a challenge. We will eventually come out of it, but it will tough for a while."
"I think everybody is in a wait-and-see mode," said Rick Alexander, who owns Alexander Mattress World in downtown Columbia. He said his business is already off 12 percent this year compared with 2008.
That’s due in part to the economy, but also to the on-again, off-again nature of the GM plant, which had already gone through a year-and-a-half shutdown in 2007 and 2008 after Saturn production ceased. The facility was revived by GM to build the new Chevy Traverse, whose production began just over a year ago.
"It’s the uncertainty that bothers us the most," Alexander said. "We keep hearing it’s going, it’s not going, they saved a few jobs, they lost a few jobs. It just wears on everybody."
That uncertainty, along with a spate of buyout and early-retirement offers to GM employees, has prompted many of the workers to hold on to their money, he said.
"They haven’t spent a lot of money in the last year or so, assuming bad things were coming," Alexander said. "But I try to look at the positive side. Unemployment might rise to 15 or 16 percent, but that’s 84 or 85 percent of the people still employed, and they’ll spend their money somewhere."
As with others in the community, Alexander believes GM would be foolish to abandon the plant. The automaker spent more than $700 million on it over the past two years, creating a modern, flexible assembly operation that is capable of building any GM vehicle.
"It’s way too much of an asset for them to leave idle," Alexander said.
Maury County Mayor Jim Bailey also believes GM will eventually find a use for the plant.
"There is light at the end of the tunnel," he said. "If the economy bounces back, we will get a nice product of some kind up there. Americans will start buying cars again."
For now, though, the car business is tough, said Bobby Parks, a longtime dealer who owns the Buick-Pontiac-GMC store just north of downtown Columbia, the closest GM dealership to the plant.
"We’re just playing it day by day," he said. "Everybody is wondering what’s coming next, and they’re holding on to their money. We had two good months in a row, but now it looks like things are starting to tighten up again."
Parks and other business people say they don’t believe most of the laid-off GM workers will rush to leave the area.
"Most talk like they would like to stay here," he said. "A lot came down from Michigan, and they like the climate here. They don’t want to go back up north where it’s so cold. They feel like they are part of the community."
‘Businesses will suffer’
Maury County would be hurt the most by a long-term shutdown of the plant, Bailey said, because the majority of the GM workers live there rather than in Williamson County. Spring Hill is more of a bedroom community for Franklin and Nashville, and has mostly white-collar workers, while Maury County is mostly blue-collar, he said.
Spring Hill Mayor Michael Dinwiddie said some sales taxes will be lost there as well, if fewer GM workers shop in Spring Hill as paychecks shrink and grow uncertain.
"For the past decade, our growth has been due to the overflow from Franklin and Nashville," Dinwiddie said of Spring Hill. "But our businesses will suffer, and the city, too. It’s mind-boggling to me why GM couldn’t use this plant. I’m optimistic, but a lot of people aren’t."
James Smith, the city manager, said the city is "holding its own" on sales taxes for now.
The city totaled about $2.85 million in sales-tax collections last year, and that total will be about $2.75 million this year, he said.
"But after six months, if there isn’t good news about the plant, I’m going to start getting real nervous — about the time our next budget is being set," James Smith said.
There also is the $250,000 annual payment-in-lieu-of-taxes that Spring Hill receives from GM, part of a total of $2.25 million the company pays. Maury County gets all of it except the Spring Hill share, a $50,000 payment to Columbia, and $25,000 to Mount Pleasant. How much of that will be paid in the future, if the plant remains closed, is uncertain, officials said.
There is no evidence of wholesale abandonment of the area by GM workers, James Smith said, adding that the inventory of new and pre-owned homes has actually gone down some in the past few months in Spring Hill.
‘We’ll survive this’
School enrollment didn’t decline in the area this fall, either, James Smith said, and Williamson County is continuing construction on three new schools in Spring Hill: an elementary, a middle and a high school.
In Maury County, a large number of homes are still on the market, and it’s "definitely a buyer’s market," said Devon Montgomery, president of the Columbia-based Southern Middle Tennessee Association of Realtors. But that’s the case throughout Middle Tennessee, she said.
"I don’t think we will see a glut of homes on the market here anytime soon," she said. "We probably will experience a slowdown, but not a drastic one, at least not at this point. It depends on how long the plant stays idle."
Frank Tamberrino, outgoing president of the Maury Alliance economic-development agency, said he has seen no evidence of "people bailing out and moving away in great numbers."
"We may see an upsurge in November as the plant closing nears," he said. "Some people will find opportunities elsewhere. But a lot of GM employees took buyouts or early retirement packages because they want to stay here. People who came here to ramp up Saturn have put roots down."
GM is not the only economic generator for the area, either, Tamberrino said.
"The whole area has continued to grow because of its proximity to Nashville," he said.
"We’ll survive this," said Bailey, the Maury County mayor. "It is a setback, and I feel bad for those folks who are losing their jobs. But it’s not going to be the end of the world."