Business Facility Closings (BFCs)

This article was prompted by the recent announcement by Newell Rubbermaid to close its Wooster, OH facilities. Because I prepared a countywide economic development plan for Wayne County, including Wooster, in the early 1990s, I saw this plant closing coming. I distinctly remember touring the land-locked and transportation-challenged Rubbermaid facilities in the City. My first thought was that these were business facilities that might not be long for this world. I discussed my impressions with the plan steering committee, which agreed that Rubbermaid should be watched closely. Then when Newell acquired Rubbermaid, I was even more convinced that keeping Rubbermaid in Wooster and NE Ohio was going to be a struggle. The rest is history--or soon to be history.

Business facility closings (BFC) are the ugly downside of economic development life. No community wants to lose the businesses, jobs and tax base it already has. It hurts the community financially and economically and personally it hurts those workers and their families that must pick up the shattered pieces of their lives after the closing takes their Dad or Mom's job away. Ask me. My Dad lost his job at Sylvania Electric in Wheeling, WV when I was a junior in high school.

Unfortunately, business closings, like business openings, are a part of the economic and business life cycles. Despite everything we have tried over my 27 years in the ED business, we have not found an effective way to counteract a plant closing when it is about to occur. By analogy, it's like taking an antibiotic to fight a resistant virus that must run its course. Medical science has taught us that the best we can do to fight off viruses is to strengthen our "immune system." That is precisely what communities, like Wooster, must do in the future. NE Ohio communities must strengthen their immune systems to become stronger and more resilient.

I remember when I first started in the economic development business back in the late 1970s in Greater Cleveland. Two-thirds of our business assistance caseload at the Greater Cleveland Growth Association involved business retention situations where area companies (mostly manufacturers) were shuttering existing plants, consolidating production capacity, and relocating production capacity and headquarter offices to lower cost and newer locations in the South and Southwest. The taste of a BFC was nasty then, and it is still nasty today.

I recall when I started the new Lake County Economic Development Center in 1984, Caterpillar had just announced it was going to close its Towmotor facility in Mentor. No economic developer wants to show up on a new job and have to deal with a major plant shutdown as his or her first business assistance case. After some time, Mentor recovered from the situation, but it was a hard road back.

So, what can we do when faced with a BFC situation? Here are a few tips that might help:

1. Continuously monitor your existing economic base. Look at big picture economic and technology trends and localize them as best you can. External events, like what happens in China, have a great impact on local economies worldwide.

2. Build strategic relationships with local companies before a problem develops. Get to know what factors drive their business and what they must do to survive and thrive.

3. Even when times are good, be prepared to present "opportunities" to local companies to grow and expand. In my assessment, two-thirds or more of what economic developers do is "react" to situations. We need to shift more of our resources and attention to being "proactive;" again even when times are good. Make proposals to local companies on how they can strengthen their market, supplier base, human resources, facilities, and other aspects of the company. Don't assume that company executives have all the ideas--they don't. Challenge them with new ideas.

4. Work on shaping the local business climate on a regular basis. Ensure that your community has an adequate supply of land and buildings to accommodate future business expansion. Make certain that your community's master plan anticipates the need for land and infrastructure for business growth. Don't allow your community to run out of developable land.

5. Work with neighboring communities on solutions that help your community and others in your area. More and more business retention projects are requiring that communities collaborate to respond to a major employer needs. Don't be afraid to enter into a cooperative agreement with another community for infrastructure and other services needed by your local companies.

6. Make incentive investments wisely. Invest in people and infrastructure, which stick around after a plant closes. Negotiate incentive agreements in a smart way that ensures the company and the community both live up to their ends of the deal.

7. Look at innovations by other communities in dealing with BFCs, such as having the company donate the closed facility to the city or local EDC for future use. Be careful not to assume responsibility for a company's environmental problems though. Brownfields are a common problem. Make sure the company does its part in cleaning up the site before it leaves.

8. Finally, always be on the hunt for new companies to locate in your community. You cannot afford to spend 100 percent of your time and resources taking care of existing companies. Statistics tell us that closings and relocations will occur and most you cannot stop. This should tell you that you must work at recruiting new companies all the time to fill holes created by those leaving. Assume that turnover will always occur--because it does.