Housing bust hits hard in small NC factory town

Sunday, February 01, 2009

By EMERY P. DALESIO, AP Business Writer



When this Appalachian town's light-switch plant went dark, fortunes dimmed for Jeff and Amanda Ruegsegger, and hundreds of their neighbors.

No more Sunday lunches at the Mexican restaurant between morning and evening church: they now pack sandwiches. No more saving for retirement: they tapped Jeff's 401(k) to pay down a home-equity line of credit. The health insurance is gone, too, replaced by prayers that the Ruegsegger's and their two teenage children stay healthy.

"There's a feeling of worthlessness," said Jeff, a former tool-and-die maker. A severance package is helping, but the lack of jobs could force the family to move.

In small towns like West Jefferson across the country, factories and families had thrived on the back of the housing boom. Now, employers are fighting for survival and laid-off workers are conserving cash.

Local officials still cling confidently to the long-term viability of their manufacturing-dependent economies. But states most reliant on this sector have some of the highest unemployment rates.

For the 12 months ending in December, Labor Department data show North Carolina's unemployment rate grew at the second-fastest clip nationwide. The biggest increase was in Rhode Island, another state with a heavy manufacturing base.

The bursting of the housing bubble delivered West Jefferson the financial equivalent of a concussion, with damage largely beneath the surface. There are no empty housing developments or surging foreclosure rates. And the county's sales tax collections have held up fairly well, thanks to Wal-Mart and Lowe's franchises that attract budget-conscious customers from neighboring counties.

But West Jefferson is not its old self.

_ The owner of West Jefferson's only radio station, Jan Caddell, said the area's retailers tell him their business is off by up to 25 percent.

_ Tammy Dreyer, the former owner of Thistlewood, a women's clothing boutique, recently shut down her shop after three years in business. "Going deeper and deeper in debt" was not an option, Dreyer said.

_ A Dodge dealership closed last summer, vacating a building where cars have been sold since the mid-1950s.

_ A food pantry operated by Ashe Outreach Ministries now feeds about 200 families a month, up from 135 families a year ago, executive director Rob Brooks said.

In a little more than a year, the town and the neighboring county seat of Jefferson have lost more than 500 factory jobs _ a number equal to 20 percent of the towns' population. The county's unemployment rate is 1.5 percentage points higher than the nationwide average of 7.2 percent.

Ruegsegger's former employer, Leviton Manufacturing Co., shut down one factory and scaled back operations at another in West Jefferson. It closed a third in Jefferson. Catawissa Lumber & Specialty Co., a maker of wood furniture, shut its 70-employee West Jefferson plant.

Hammered by the same broader market forces, many of the region's construction workers are also without jobs.

"This is all about what's going on with the residential housing market," said Leviton human resources vice president Mark Fogel.

Local factories that make ambulances and aircraft parts have so far escaped layoffs. But an auto parts factory was forced to reduce its work force by roughly 8 percent.

At the turn of the 20th century, West Jefferson was perhaps best known for its dairy farmers, and a cheese factory remains one of the region's signature employers. Today, government agencies and a hospital are big employers, too.

Still, manufacturing has for decades been the backbone of the economy, its ups and downs tracking the fortunes of the furniture, textile and apparel industries.

During hard times, residents count on side jobs to carry them through. They farm small plots of land. They also grow Christmas trees _ locally grown Fraser firs have been the official White House tree two years running. But the depth of this recession has forced tougher decisions.

Former Catawissa plant manager Brantley Price and his wife already sold $11,000 in beaten-down stocks to pay off their pickup truck and SUV; and they'll sell more so that their sons, aged 13 and 9, can continue competing on traveling basketball teams.

Earlier ideas of expanding his stand of Christmas trees or raising more beef cattle with his brother are on hold since those markets are depressed too. Price, who is 45, recently put a 5-acre lot of land up for sale. His next career move is still up in the air.

"It won't be manufacturing, you can bet on that," Price said.

But manufacturing is likely to remain central to the area's economy into the future, county economic development director Pat Mitchell said. She has been working with officials in two neighboring counties for years to attract companies that make ceramics, plastics and other materials.

For now, the Ruegseggers are trying to live frugally.

They expanded the vegetable garden on their 20-acre mountaintop property, a former dairy pasture inherited from Amanda's father.

Amanda, 38, buys the family groceries each week at Wal-Mart. But she no longer stops at the Domino's pizza franchise on her way home _ it shut down in August.

As he searches for work, Jeff, 49, tries to make the most of the government's jobless benefits. He started a computer course, and plans to get trained as a heating and air conditioning technician. He may even sign up for community college. But none of this is satisfying.

"If I could find a good-paying job, it kind of validates my role as head of the household," he said.

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