honoluluadvertiser.com

Sponsored by:

Comment, blog & share photos

Log in | Become a member
The Honolulu Advertiser
Posted on: Thursday, November 23, 2006

Belt-tightening seen across Rust Belt

By Connie Mabin
Associated Press

Frank Parravani, a 39-year Goodyear Tire & Rubber Co. employee, pickets in Akron, Ohio. Worries abound in the area about holiday shopping on a striker's budget.

TONY DEJAK | Associated Press

spacer spacer

AKRON, Ohio — A few steps from Goodyear Tire & Rubber Co.'s hulking headquarters, striking factory workers marked a month off the job in early November by erecting a lopsided Christmas tree.

Red and white bulbs join sparkling gold garland. Instead of a star, a tiny wood block reading "USW L2" — United Steelworkers Local 2 — tops this plastic pine. Beneath, instead of presents, there are cardboard head stones with the names of the 16 plants in the United States and Canada that are on strike.

"As I looked at that, I said, 'Oh my God. I hope we're not here until Christmas," said Joe Locascio, who's made a decent living working for the world's third-largest tire maker for more than three decades but worries about holiday shopping on a striker's budget.

He's not alone. This holiday season, there's plenty of belt-tightening across the Rust Belt, from anxious auto workers in Detroit to striking tire makers in Ohio. And small-business owners, especially, are feeling the pain.

"Nobody takes this as a paid vacation," said Jeff Berger, who spends some of his time on the Goodyear picket line worrying about gift buying. "A lot of people aren't sleeping lately."

Many aren't spending much either.

Goldman Sachs and other analysts predict layoffs, high gas prices and other economic struggles will hit the Midwest the hardest this holiday shopping season, a period when retailers nationwide usually rack up about 20 percent of their annual revenues.

Unemployment is fairly low nationwide, at 4.4 percent, and holiday sales overall are expected to be robust — up 5 percent to $457 billion, according to the National Retail Federation.

But times are tougher in some Midwestern areas.

In Akron, the unemployment rate is 5.4 percent. It's 5 percent in Cleveland, the nation's most impoverished big city where steel and other manufacturing jobs have been lost. Michigan has the nation's highest unemployment rate, 6.9 percent.

More than half of Dearborn, Mich.-based Ford Motor Co.'s 35,000 to 40,000 white- and blue-collar job cuts are in the Midwest, and that will be especially challenging to stores such as Kohl's Corp. that have a heavy presence in the region, Goldman Sachs points out in a report to investors.

The Midwest hasn't benefitted from some of the national economic trends, said Karl Bjornson a strategist at retail consulting firm, Kurt Salmon Associates. He forecast the region will see holiday sales growth of between 4 percent and 4.5 percent, lower than what's expected nationally.

"I don't predict it to be a dismal Christmas but it certainly isn't going to be a Christmas like we saw last year," Bjornson said.