Archive for September, 2005

Brainstorming Newton’s future

September 30, 2005
Brainstorming Newton’s future
 
Date September 30, 2005
Section(s) Columnists
By Sen. Dennis Black  
 
Location, location, location! I heard that again this week while speaking to a business forum in Altoona, where an Altoona businessman commented about the prime location of Newton in regard to population and business expansion. Along with Jasper, my Senate District covers eastern Polk County, so I spend considerable time in Altoona, Mitchellville, Bondurant and Runnels. Traveling east from there, I see the expansion of housing into western Jasper County. Frankly, most of this was anticipated, as the expansion westward into Dallas County from Des Moines has become crowded with miles and miles of “cookie-cutter” homes. Builders seeking more open spaces are moving into Jasper, and commuting to their jobs in Des Moines.

I lament the fact that state government has invested big bucks – literally untold millions, in projects and programs for economic development that just plain didn’t work. I voted for some; voted against others. Yet, many did succeed, and what is interesting is the fact that some of the greatest success stories come from the state participating in projects related to leisure-time pursuits and tourism. A great example would be that of the National Mississippi River Museum and Aquarium in Dubuque. Newton’s own Mark Wagner is the Museum Director at the facility and it brings thousands and thousands of tourists into the city.

During the past decade state government financial involvement has failed in several projects that sponsors virtually guaranteed would succeed. I quickly learned that government should not get involved in doing those things that private enterprise can do better. Untold millions of state dollars have gone to projects that just didn’t succeed, such as a Laser Building at the University of Iowa and nearly a half-billion dollars to a statewide fiber-optic system that is on the verge of antiquity. I supported the U. of I. Laser Building., but adamantly opposed the state ownership of the statewide fiber-optic network, calling it “a big black hole, that will consume a half-billion dollars from other critical needs during the decade to come.” I was correct.

The process for eventually achieving economic growth in a community commences when someone brings forth an idea on products, services or opportunities. Once the idea reaches critical mass — where a person or group of people believe it will work, then the process moves on to evaluating market demand, securing a funding stream, detailed planning, and finally, implementation. That’s the American way — believing in some endeavor so strongly, that you are willing to take the personal risk to make it happen. That’s how we ended up with Maytag in Newton, along with the Vernon Company, Thombert, Keystone Laboratories, Meisner Electric and other local ingenuity in small business and industry creation that provide the jobs that make us what we are. A great example of a new small business is that of Multi-Packaging, located in the Meisner Center. Franchette Braaksma and her husband are endeavoring to fill a regional void in assembly-line packaging. The couple is committed to the success of the business, and is innovative in their choice and use of equipment in an expanding market of on-site packaging of hard goods and food products.

A thriving community is one that works together; one justifiably inter-dependent, where the needs of the private sector are met with a talented and productive workforce, and the laboring men and women rewarded with livable wages, benefits and job satisfaction. Fairness in tax policy is essential for long-term commitment of any business, and government cannot be overly restrictive with regulations and expect business to succeed.

Not every business endeavor works. Fred Maytag was undoubtedly discouraged when some of his ideas didn’t jell. Several items, including automobiles and farm implements, just didn’t seem to catch-on. However, his washing machine did, and surely he would be honored to know his humble beginnings having become one of the top 500 industries in America.

The Newton Daily News, by way of Pete Hussmann’s research, is doing a remarkable job of not only keeping the community informed about potential transitions in our major industry, but also provides some insight into the positive assets of the county and region. Attitude is everything, and thus the critical aspect of all working together for the good of the whole is essential. Brain-storming is occurring and all citizens should feel compelled to step forward with their ideas of making the area progress and prosper.

I have yet to hear back from Whirlpool CEO Jeff Fettig, to whom I made the case that Iowa has much to offer, and the bottom-line of that corporation would well enhanced by the preservation of “Washer City.” I urged him to “come check us out.”

Questions or comments? Write Box 1271, Newton, 50208; or e-mail dblack@black4senate.com

Ohio company recalls refrigerators, freezers sold under Maytag, Amana

September 28, 2005
Ohio company recalls refrigerators, freezers sold under Maytag, Amana
 
Date September 28, 2005
Section(s) Business
Brief  
 
An Ohio company is recalling about 112,000 automatic defrost upright freezers and refrigerators.

W.C. Wood Co., Inc., says the defrost heater coil can become exposed inside the units, which poses a potential shock hazard to consumers.

In some cases, the exposed heater wire can melt or burn the unit’s interior plastic food liner.

The recalled single-door freezers and refrigerators are 15-, 17- and 20-cubic foot automatic defrost upright freezers and 17-cubic foot automatic defrost refrigerators that can be converted into freezers.

They were sold under the brand names Amana, Crosley, Danby, Maytag, Whirlpool and Wood’s.

The manufacturer label with the model number and date of manufacture is located on the inside of the cabinet.

A list of model numbers and dates of manufacture included in the recall is listed below:

* Amana: Model Nos. AFU1567, AFU1767, AFU2067

* Crosley: Model Nos. FFCR17, WCF15, WCF17, WCF20

* Danby: DUF1700, DFF1708

* Maytag: MQU1556, MQU2057

* Whirlpool: EV150NXM, EV170NYL, EV171NYM, EV200NXK, EV201NXM, EL7ATRRK, EL7ATRRM, EL7JWLKM, EL7JWKRM

* Wood’sF15, F17, F20, F42, F47, F55, WFF15, WFF17, WFF20, RFA17, RFC17, R47FM

The recalled freezers and refrigerators were sold at home improvement and appliance stores from September 2002 through February for between $400 and $1,000.

Consumers should contact W.C. Wood to arrange for a free in-home repair.

Consumers can call the company at (866) 493-3314 or visit the company’s Web site for more recall information.

Korean made Maytag front-load washers recalled

September 28, 2005
Korean made Maytag front-load washers recalled
 
Date September 28, 2005
Section(s) Business
Brief  
 
Maytag is recalling about 5,000 front-loading washing machines manufactured by Samsung Electronics in South Korea that pose a safety risk to owners.

If the front-load washer is operated at maximum load capacity, the spinner could malfunction and break apart, posing a safety risk to consumers, according to the U.S. Consumer Product Safety Commission.

The recall involves white Maytag front-load washers with model number MAH9700 and a serial number from 10188468GA through 11683946GJ. The model and serial numbers are located inside the door opening and below the rubber boot.

The units were sold at major department and appliance stores nationwide from April 2005 through May 2005 for about $1,300.

Consumers should use care not to exceed the listed capacity of their machines and should contact Maytag for a free in-home service call to replace the washer’s control board.

There have been no reported incidents or injuries caused by the malfunctioning machine.

Consumers can contact Maytag at (800) 462-9267 anytime, or visit the company’s Web site at www.maytag.com.

Justice Department to review Maytag-Whirlpool merger

September 27, 2005
Justice Department to review Maytag-Whirlpool merger
 
Date September 27, 2005
Section(s) Local News
Brief  
 
By DAVID PITT

AP Business Writer

DES MOINES (AP) — The antitrust division of the Department of Justice will be the agency investigating the proposed Whirlpool Corp. purchase of Maytag Corp.

Such mergers must be investigated and approved by either the Department of Justice or the Federal Trade Commission. Both agencies conduct investigations into antitrust matters and which one takes on a case usually depends on which has the most experience with the particular industry in question.

Both agencies had expressed interest in the looking into the proposed purchase. Resolution of the issue was announced Monday by Gina Talamona, a DOJ spokeswoman.

Steven C. Sunshine, a supervisor of the DOJ’s antitrust division’s merger enforcement program from 1993-1995, said he had heard rumblings between the agencies on the Whirlpool-Maytag deal.

“They both like to take cases that they think are interesting, high profile and will get them good experience,” he said. “The fact that the two agencies are having a clearance dispute over the merger signifies that both agencies think it’s an interesting deal, and they want to look at it.”

Sunshine, who is now head of the antitrust practice at the New York law firm of Cadwalader, Wickersham & Taft, said a quick resolution was necessary because requests for certain information must be filed within 30 days of the notification of the proposed merger.

Whirlpool, the nation’s largest appliance manufacturer, notified the federal agencies early this month of its intention to by Maytag, the third largest.

Justice department officials will make a formal request of the two companies for information about the deal.

Maytag shareholders must approve the acquisition and will vote on the proposal before the end of the year. No date has been set. The agreement does not need the approval of Whirlpool’s shareholders.

Benton Harbor, Mich.-based Whirlpool has offered to buy Maytag for $1.79 billion, or $21 a share. Including the assumption of $977 million of Maytag debt, the entire deal is valued at about $2.7 billion.

Both companies have said they expect to close the deal during the first quarter of 2006, although some industry analysts have said regulatory approval is likely to take much longer because it will concentrate a large percentage of the appliance industry in one company.

About 72 percent of washing machines and half the dishwashers bought in the United States would be made by Whirlpool or Maytag. Overall, Whirlpool would have about 48 percent of the market share in major appliances, far ahead of General Electric, which has about 26 percent and Electrolux, with about

20 percent.

Whirlpool executives have said they are so confident of approval, they will pay Maytag $120 million if regulators block the deal.

Regulators could require one or both companies to sell off portions of their business before giving the deal approval or could prohibit it.

Whirlpool shares closed 15 cents lower at $72.99 on the New York Stock Exchange. Maytag closed 1 cent lower at $17.80.

Deadline set in Hoover machinery squabble

September 26, 2005
Deadline set in Hoover machinery squabble
 
Date September 26, 2005
Section(s) Local News
Brief  
 
By the CANTON REPOSITORY

Special to the Daily News

NORTH CANTON, Ohio — Factory workers at the Hoover plant should know by the end of November if production machinery will be hauled to plants in the Southwest.

An agreement finalized early Friday sets a Nov. 21 deadline for an arbitration ruling on whether Maytag Corp., Hoover’s parent company, can move up to 14 injection molding machines to El Paso.

The machines are used to make a carpet extractor line. Moving the machines could eliminate 150 current jobs and keep another 150 laid-off workers from returning.

The International Brotherhood of Electrical Workers Local 1985 filed a suit in U.S. District Court to block Maytag‘s attempt to move the machines. During a Sept. 8 hearing, the company and union were told to resolve the dispute through arbitration.

James Repace, Local 1985 president, updated members on the arbitration Friday afternoon, and used the update to quash rumors that Maytag plans to close the local factory in December.

“Although we cannot predict the future, Hoover Co. is not closing in December, nor is there any discussion going on about a plant closing or any immediate plans of the Hoover Co. closing,” Repace wrote to members. “Please, as I have stated before, do not get caught up in rumors.”

Repace said rumors of a closing ran rampant through the plant on Thursday and Friday morning. On Wednesday, Maytag announced lower earnings.

Friday’s agreement states Maytag can move no more than 10 injection molding machines before Nov. 21. Of the 10 machines that might be moved, two are scrap, Repace said.

Maytag isn’t allowed to move two robotics machines or any molds until after the arbitration is settled. Maytag also must place $80,000 in an escrow account to cover the cost of returning machinery to North Canton if Local 1985 wins the arbitration.

Plans to cut jobs and move the equipment were announced in April. Since then, Maytag has agreed to be purchased by Whirlpool. Union officials had hoped to block the production cuts until after the sale. The $1.7 billion deal is expected to be completed early in 2006.

Doing what they doo best — producing food

September 23, 2005
Doing what they do best — producing food
 
Date September 23, 2005
Section(s) Columnists
By Sen.Dennis Black  
 
A viable local economy is comprised of many components. Last week, my column discussed local manufacturing, and the fact that Newton’s major manufacturing component was served by men and women who were employed doing what they did best — building appliances. Now, we have the component composed of the rural population doing what they do best — producing food. Eventually, I will get to the component of local manufacturing smaller than Maytag, conventional small-business and the additional component of non-resident dollars accessing the local economy through tourism.

MY POINT WITH all this is to simply get folks thinking about the big picture. Economies are dynamic, and economic vitality comes from diversity, change and improvement. Frankly, I’m not in a “doomsday” mental mode with the Whirlpool buyout of Maytag. Conversely, I’ll not give up attempting to get the Benton Harbor, Mich., folks to recognize that Newton’s location in the center of the nation; our defined transportation and work force assets; and the existence of corporate and factory infrastructure is absolutely advantageous to the bottom line of Whirlpool. Add to these things our schools, colleges, low crime rate, environmental quality and affordable housing, and I would think the pragmatic CEO of Whirlpool, Jeff Fettig, would view Newton, Iowa, as a “slam dunk.”

I regress, so now to the issue of area food production! Ten million metric tons of corn, or approximately 393 million bushels, were purchased by Taiwan during ceremonies in Des Moines on Monday. This calculation is based on an average bushel weighing 56 pounds. The Sully Co-op Exchange along Highway 14, northwest of Newton, has bin-storage capacity of slightly over a million bushels. Thus, the Taiwan purchase of corn covering the next three years is the equivalent of about 390 times SCE’s Newton storage. Absolutely unbelievable! The rough estimate of the purchase is in the neighborhood of $1 billion, although the value of each individual shipment across the Pacific would vary, depending on the per bushel price — spot market.

Another interesting view of Taiwan’s corn purchase comes from comparing it to this year’s Iowa and nation-wide corn production. Iowa’s production for 2005 is projected at two billion bushels. Total U. S. production is ten billion bushels. Thus, the Taiwan purchase becomes one-fifth of Iowa’s annual production, and one twenty-fifth of the national production. However, their purchase covers a three-year period.

I’ve been asked by some constituents how Taiwan will use the grain. All will be for animal feed, utilized by the island’s farmers for chickens, ducks, geese and pork. Poultry is an important staple of the Taiwanese diet, especially ducks and geese, which are raised by the millions.

IOWA FARMERS FEED the world, and a good portion of our statewide economic enhancement and job development initiative should focus on the fact that collectively, our rural residents are doing what they do best — producing food. Food grains, feed grains and grain for energy production of ethanol and biodiesel are in great demand. Frankly, we can sell all we produce. Yet, unlike crude oil, with wide daily fluctuations based on supply and demand, the price of basic food and feed resources is cheap and fairly stable! It’s rather amazing when you realize that a bushel of corn, weighing 56 pounds, is today worth less than a gallon of gasoline! Sixty years ago, during the mid to late ’40s, corn was $3 a bushel, while at the same time, gasoline was generally less than 20 cents a gallon. Farmers are not getting rich from their grain production. It’s a risky business, requiring tremendous inputs, never-ending prayers for rain during the growing season, hope for a bountiful harvest and additional hope for a profit. Their margin is very slim.

I’m anticipating another trade mission from Taiwan soon, with their interest being Iowa’s specialty soybean production for soy milk, flour, tofu and oil. Once the goodies are extracted from the bean, the residual is great animal feed. Huge purchases of our soybeans are processed into oil, now utilized throughout the entire island population and across Asia in cooking. Soy is nature’s perfect bean, truly a magical bean, and soy foods have taken the country by storm. Again, Iowa farmers are doing what they do best — growing food. And since we lead the nation in both corn and soybean production, we enhance our statewide economy by expanding the uses of these grains and ensuring that foreign markets like Taiwan are in demand of our bounty.

Questions of comments? Senator Dennis Black at Box 1271, Newton 50208; or dblack@black4senate.com

Better headline?

September 22, 2005
Better headline?
 
Date September 22, 2005
Section(s) Opinion
Brief  
 
To the Editor:

Perhaps Mr. Hussmann’s Sept. 20 front page article should have read, “Will Newton be able to weather Maytag‘s departure, and the Newton Speedway project?”

Deana Williams

Newton

Maytag predicts lower earnings, hints at plant closings

September 20, 2005
Maytag predicts lower earnings, hints at plant closings
 
Date September 20, 2005
Section(s) Local News
Brief  
 
By DAVID PITT

AP Business Writer

Maytag Corp. says its earnings for the third quarter and for the full year will be significantly lower than earlier estimates, and the company’s chief executive released a statement suggesting factory closings could be coming.

Higher costs from a high manufacturing overhead, increasing distribution and fuel expenses and rising raw materials costs all are cutting into profits, the company said Monday.

“Our fixed cost structure remains a barrier to acceptable financial performance, and we intend to address this issue,” said Ralph Hake, the Newton-based company’s chief executive.

“The actions we take might require restructuring charges, including asset write-offs, accelerated depreciation and certain cash costs. These actions will need to be undertaken irrespective of the pending merger with Whirlpool.”

Benton Harbor, Mich.-based Whirlpool Corp. officially notified the Federal Trade Commission and the U.S. Department of Justice last week of its intent to purchase Maytag in a cash-and-stock deal valued at more than $1.7 billion, plus the assumption of nearly $1 billion in Maytag debt.

Industry analyst Laura Champine, with Memphis-based Morgan Keegan & Co., said Maytag undoubtedly is establishing the need for factory closings.

“Oh, absolutely they’re setting up to close plants, they’ve been doing that for years. Perhaps this accelerates it,” she said.

Maytag shares closed down one cent to $18.54 Monday on the New York Stock Exchange. Shares dropped 73 cents in after hours trading. The statement was released after trading closed for the day.

Hake said sales projections in Maytag‘s top-line appliances are strong compared to last year, but cost increases are hurting profits.

He said that despite uncertainty in recent months caused by the pending sale of the company to Whirlpool, Maytag achieved high single-digit sales growth in its major appliances product lines through the first two months of the third quarter.

Hake said unfavorable product pricing in floor care also is hurting performance. The company also expects to record significant merger and acquisition expenses in the third and fourth quarters of this year.

The full-year results will be “significantly lower” than earlier guidance and “Maytag expects to report a loss before any restructuring charges in the third quarter.”

As a result of the current business performance and uncertainty of the restructuring, Maytag will no longer provide earnings guidance, the company said.

Champine said it’s no surprise that skyrocketing oil prices may cause Maytag to miss previous earnings estimates. She said what is perplexing is that the company cites its manufacturing platform costs as a reason for the unexpected cost increases.

“What’s frustrating from an investor’s perspective is the difficulty in forecasting that burden,” she said. “It is frustrating, the continual earnings warnings, as it has been for some time now.”

Maytag also announced it would move forward with a new asset-based $600 million, five-year borrowing plan, which will replace a current $300 million credit line.

The new credit line will be led by J.P. Morgan Chase Bank, N.A. and Citigroup Global Markets, Inc. and secured by accounts receivable and inventory of certain Maytag subsidiaries.

New energy bill may help keep Maytag production jobs

September 20, 2005
New energy bill may help keep Maytag production jobs
 
Date September 20, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

A new federal energy bill signed into law this summer may help to ensure continued production at Maytag operations in Newton, even under new Whirlpool ownership.

In late July, President Bush signed the bill, giving tax credits to U.S.-based manufacturers of high-efficient home appliances. Maytag said the measures will allow it to expand its sales of high-efficiency washers, refrigerators and dishwashers while gaining tens of millions of dollars in federal tax credits for the next two years.

The assistance for U.S. appliance manufacturers was added to the bill by Sen. Charles Grassley, R-Iowa, and Rep. Jim Nussle, R-Iowa.

The appliance manufacturers’ tax credit applies only to appliances produced in the U.S. It gives producers of high-efficiency appliances a credit of $50 to $175 for each highly efficient appliance produced in excess of a rolling baseline.

The baseline is the average number of appliances produced in the three previous calendar years that meet standards set by the U.S. Department of Energy under its Energy Star program.

The Maytag Neptune front-load, produced in Newton, has earned the Energy Star rating. The maximum credit for each appliance manufacturer is $75 million over a two-year period beginning in 2006.

Grassley said Maytag has backed the effort to get the provision passed through Congress and signed by the president.

“Over the two to three years we’ve been working on this, Maytag has been one of the biggest supporters,” Grassley said in a telephone interview. “It helps in keeping them competitive, and, from a standpoint of jobs, it is very helpful in keeping jobs in the U.S.”

Whirlpool produces its high-end, energy-efficient $1,200 Duet model in Schorndorf, Germany. Almost two million of the front loaders have been sold in the United States since coming on the market in 2001. Labor costs in Germany are $32 an hour, including benefits. Production of the high-efficient product in Germany would not be eligible for the new appliance manufacturers’ tax credits included in the energy bill

The provision in the energy bill flew largely under the radar, although Maytag CEO Ralph Hake commented on the tax credit to First Call at the time.

“The appliance manufacturers’ tax credit will support our future product innovations and is expected to have a positive impact on the company’s overall financial performance,” Hake said. “In addition, the energy bill is a winning proposition for both the consumers and the environment.”

Also included in the energy bill are provisions for state-sponsored incentives, including authorization of up to $250 million over five years to provide rebates to consumers purchasing energy-efficient appliances.

David Steiner, Maytag‘s vice president of government affairs, said Maytag has long backed the federal effort to provide the tax credit to U.S.-based appliance manufacturers.

“It will encourage further development of new energy-efficient, environmentally-friendly appliances and will help support American appliance manufacturing jobs,” he said.

Will Newton be able to weather Maytag’s departure?

September 20, 2005
Will Newton be able to weather Maytag’s departure?
 
Date September 20, 2005
Section(s) Local News
Brief  
 
By PETER HUSSMANN

Editor

With Maytag‘s future in Newton uncertain at best, the community faces a sobering question: Just how bad it will be?

The jeopardy could be large. If all of Maytag‘s more than 2,000 jobs went away, would the impact buckle the local economy, chill housing values and force local governments to cut services amid tumbling tax revenues? In a worst-case scenario, Newton might wind up flat on its back.

But that might not be the outcome. A number of factors suggest Newton may be in better shape to weather the blow than it appears on the surface.

Maytag‘s impact

Maytag‘s dominance in the local economy cannot be understated.

The company employs nearly 10 times as many people as the city’s next largest employer, and it’s the source of more than a quarter of the total wages paid countywide.

The numbers tell the story.

Early this year, the Newton Chamber of Commerce’s annual employment report showed 3,200 people employed at the Maytag headquarters and the production plant, down from more than 3,800 the year before. The breakout showed 1,800 jobs at headquarters and 1,400 at Plant 2, the first time corporate employment levels have exceeded production jobs.

Maytag will not release employment numbers, and the job levels, especially at the corporate site, may be lower now. But even so, state figures still show Maytag is by far the community’s largest employer.

Maytag towers above the rest. Skiff Medical Center ranks second at 375 jobs. Next are Wal-Mart and Iowa Telecom, each with 250 jobs.

That means Maytag paychecks are a huge factor in the local economy.

Local wages

In 2003 and 2004, manufacturing jobs accounted for nearly 28 percent of the county’s total employment of just over 14,000 people, according to Iowa Workforce Development statistics. And Maytag jobs accounted for nearly three-quarters of the manufacturing total, producing gross wages of nearly $137 million.

In 2003, the average manufacturing wage in the county was $970 per week, the highest in the state. Those paychecks produced a total of $195.2 million in gross total wages.

Now, according to data the state will release next month, the county’s average manufacturing wage has fallen to third highest in the state, at $965 per week, or $183.8 million in gross wages for the year.

In 2002, gross wages in the county’s manufacturing sector topped $205 million. So the total manufacturing payroll in Jasper County has fallen by $23 million — more than 10 percent — over the last three years.

Impact less severe?

Over that period, Newton has lost hundreds of Maytag jobs. But a number of indicators show that these large reductions have not had an equally large negative impact.

Population has grown, school enrollments have been stable and residential home sales have remained strong — an outcome that economists say runs contrary to expectations.

Officials with the UAW Local 997 count as many as 1,600 lost jobs at its production plant in Newton since peaking around 2,600 in 2002.

In May of 2004, Maytag announced a corporate restructuring aimed at reducing 20 percent of its salaried workforce — 1,100 jobs. Maytag won’t say how many of those positions were eliminated locally, but anecdotal evidence suggests it was at least several hundred.

With the loss of as many as 2,000 jobs locally in the last few years, it could be expected that Newton would be reeling. That does not appear to be the case.

Population estimates up

Newton and Jasper County show signs of population growth rather than stress. U.S. Census Bureau estimates say Jasper County saw an increase of 495 residents between 2000 and 2003, a 1.3 percent growth rate compared to 0.6 percent statewide. The City of Newton’s gain for the period was estimated at 213, almost half of the total.

Signals involving children, although less scientific, also point in the same direction.

Newton Community School District Superintendent Steve McDermott says the district’s enrollment trends for the past 10 years have been generally downward, from about 3,500 students in 1994 to about 3,300 students in preliminary counts this year.

But he notes that kindergarten classes have grown the past two years, requiring the addition of an extra section. Kindergarten levels have topped 300 students the past two years, well above the 220 to 240 levels seen in prior years.

“We are not seeing a direct proportional relationship between the number of lost jobs at Maytag and a decrease in student enrollment,” McDermott said. “One would think there would have to be a tie, but we’re not seeing it at the same rate.”

Birth rates at Skiff Medical Center also have run against the tide.

Eric Lothe, Skiff’s administrator, said the hospital is on pace to surpass its record in 1978, when 260 babies were delivered at the city’s hospital.

Housing market

With the workforce reductions at Maytag over the past few years, it might seem that many displaced families would have sold their homes and moved away. In theory, this should mean more houses on the market, longer selling times and lower sale prices. But if this has happened, local real estate figures show the effects have been moderate.

Records of the Newton Board of Realtors do show more homes on the market — an average of 29 more each month this year than last year, 181 to 152. That’s a 19 percent increase. But over the same period, the average number of monthly sales has increased almost as much — 13 percent (25 a month in 2005 sales versus 22 in 2004). And the number of days on the market before sale is shorter this year, 122 compared to 131.

Average sales prices are up nearly 8 percent over last year, $108,395 compared to $100,469, and remain above the recently revalued assessments for residential properties in the city of $96,700. (This assessment includes land, buildings and the full value of abated properties. The city has more than $10.5 million worth of residential abatement currently on the books.)

New residential construction in Newton has not been strong in recent years (only eight new home starts last year and five to date this year), but Jasper County has seen record levels of residential development in rural areas.

From 2002 to 2004, 341 new residential construction permits were issued with a total value of $34.8 million. So far this year, 64 residential permits have been issued with a value of $5.6 million. The county does not offer tax abatement.

Impact of commuters

Iowa State University economics professor David Swensen, who tracks Iowa manufacturing data and employment statistics, points west to explain Newton’s relative stability despite the recent loss of thousands of Maytag jobs.

“You have a lot of workers who don’t live in Newton, and the flow into Des Moines is strong,” he said. “It has to be massive.”

Data from the Office of Social and Economic Trend Analysis at ISU confirm Swensen’s assumptions.

In 2000, SETA data show, nearly 3,500 Jasper County workers were employed in Polk County. Local economic officials say that number has grown significantly in the past two years.

The data also show that nearly 1,000 Polk County workers commuted to Jasper County for work. More than 1,000 more came from Marshall, Marion and Poweshiek counties.

Location, Location, Location

These factors — Newton’s easy access to the greater Des Moines labor market and the large number of employees in-commuting to the county — would reduce the impact on Newton and Jasper County if Maytag were to close, Swensen said.

“Newton’s location relative to the Des Moines metro region is important,” he said. “People are leaning toward Des Moines, and it has enabled Newton to stay stable. That’s important as Newton’s dependence on Maytag ebbs.

“Long term, Newton is looking at a transformation of its economy from Maytag to a modern economy where technology replaces workers in the manufacturing sector.

“It’s hard to escape that reality,” he said. “It’s like pretending the levee won’t break in New Orleans.”

From an economic impact standpoint, Swensen said, it appears Maytag does not have as many linkages to the community and the rest of its economy as people might think.

Lothe, the Newton hospital’s administrator, gives an example: Only 13 percent of Skiff Medical Center’s gross yearly revenues are generated through Maytag insurance.

While Maytag‘s departure may not cause the economic tidal wave some might expect, Swensen does foresee an impact on wage rates if the appliance manufacturer does ultimately close its doors.

“What it will get is a wage ripple, a household income ripple; primarily wages will be impacted,” he said.

Iowa State University economics professor Peter Orazem said Newton’s nearness to the Des Moines metro area has been a huge benefit in the face of declining Maytag employment. Even with gas prices high, he said, the commute is within the range that many workers are willing to make. This means many may stay in their homes in Newton even if they find jobs in Des Moines.

“Economically, Des Moines is doing well,” he said. “That’s what’s absorbed (Newton’s job losses.) That Newton has been able not to lose population bodes well for the future.”

Better scenarios?

All of this suggests a worst-case scenario at Maytag might produce something less than a full-scale disaster for Newton and Jasper County.

And a worst-case outcome at Maytag is still far from certain.

A big question, Orazem says, is what plans Whirlpool may have for the Newton facilities. While Maytag‘s headquarters might very well close under Whirlpool ownership, the production plant might stay open or even expand, he said.

“There’s worse things in the world than having someone with deeper pockets take over,” he said. “The potential of being 20 percent part of a stronger firm is better than being 100 percent part of a weaker firm.”

COMING SOON: The tax impact on Newton city government could be significant.