Wood products industry layoffs create ripples of painby Tom Robertson, Minnesota Public Radio
The decline in new housing starts in the U.S. is devastating northern Minnesota's wood products industry. Over the past few months, Canadian-owned Ainsworth Lumber Company indefinitely shuttered its facility in Cook and permanently closed another in Grand Rapids. The company produces oriented strand board, a wood fiber board used in home construction.
Now, Ainsworth has shut down its facility in Bemidji, putting about 140 people out of work. Folks there are just beginning to assess the economic impact.
Bemidji, Minn. — Curt Peterson lost his job at the Bemidji Ainsworth plant just last week. He says that stark reality hasn't hit him yet.
For now, he tries to keep himself busy. Peterson stands in his kitchen surrounded by amber beer bottles. He's sanitizing them for his newfound home beer-brewing hobby. Peterson jokes that he now has more time to sample the fruits of his labor.
Peterson, 53, spent the past decade making good money at Ainsworth. Now he doesn't know what he'll do.
Good paying jobs are scarce these days, so he figures he might have to go back to school.
He figures with unemployment benefits, his income has been cut in half. He's been combing through the household budget to find ways to cut back.
"Hopefully I'll be able to make the bills," said Peterson. "You know, you kind of prioritize, and we're going to be looking at making any cuts we can. I'll be stopping my newspaper subscription, I know, and looking at our cell phone bills or plans. The entertainment budget is going to be slashed. We didn't have a big entertainment budget to begin with."
Peterson's wife, Tonie, works as a hostess at a local restaurant, where she earns not much more than minimum wage.
She figures they'll stop going out to eat and they won't go to movies anymore. Tonie Peterson says the loss of income has dashed some of her dreams.
"I had hopes this winter to save up for new flooring," she said. "Well, I've already crossed that off the list. I've crossed saving for a new stove off the list. The list really isn't there for the, 'I'd like.' Now it's, 'What do we need, and can we do without it?'"
Unemployment couldn't have come at a worse time for Curt Peterson. The Wall Street meltdown has devastated his 401k account, putting the couple's long term plans up in the air.
"As far as retirement, I don't know if I'll ever be able to retire," said Peterson. "I'd like to start looking at thinking about retiring when I'm in my early 60s, but now I don't think that's going to be feasible."
The Ainsworth layoffs mean the loss of a $10 million payroll in Bemidji. Local economists say it will likely affect every sector of the town's economy, from luxury retailers down to the basics, like grocery stores.
Brent Sicard is store director at Lueken's Village Foods, an upscale, locally-owned supermarket in Bemidji. Sicard says consumer sentiment was gloomy even before the Ainsworth layoffs.
Sicard conducted a survey of his customers, and it shows that Lueken's is loosing some shoppers to Walmart.
Some Lueken's customers say they're making fewer trips to the store to save on gas, and they're buying fewer impulse items and sticking mostly with necessities.
He says the Ainsworth shutdown will make things worse.
"It does cause a ripple effect, I think," said Sicard. "A panic, perhaps, for the community, where other people are concerned, 'Well, if they close down, who else is next?' And it causes them to kind of shut down a little bit, or to dial back on some of their shopping. So now, psychologically, I think that people are just jarred."
Local observers say the news will likely get worse.
The halt in production means many loggers and truckers are now out of work, too. The Ainsworth plant typically consumed 550,000 tons of logs annually.
Larry Young, who heads the Bemidji Area Forestry Affairs Council, points to a recent University of Minnesota Duluth study that looked at just such a scenario -- a plant closing -- to gage its full economic impact.
Young says the study found the total direct and indirect impact for a similar loss of jobs would exceed $90 million annually.
"What their research showed is for every one job that goes down at the mill, you have 1.6 jobs going down in the community," Young said. "So it's about a one-and-a-half ratio. You're not talking just 140 jobs, you're talking more like 300 to 400 jobs that could be lost totally as a result of this."
Ainsworth Lumber Company officials say the shutdown of their three northern Minnesota plants is the result of the worst housing crunch in a generation. They say some of the facilities could eventually reopen if housing starts rebound. But that appears unlikely any time soon.
- All Things Considered, 10/17/2008, 12:35 a.m.