Archive for the ‘Forging Ahead’ Category

Newton faces another tough budget year

July 11, 2006
Newton faces another tough budget year
Date October 04, 2005
Section(s) Local News


When Newton City Administrator Dave Schornack looks out his office window, Maytag looms large on the Newton skyline. And while many worry about losing thousands more Maytag jobs, Schornack must also face the threat that the city could lose large amounts of Maytag tax revenue.

Maytag currently pays a whopping $936,000 in taxes to the city, so this could mean a big blow to the city’s payroll, and therefore to city services. And it could create an awkward financial predicament for a multi-million-dollar city program designed to promote growth.

It wouldn’t be the first time declining Maytag taxes have caused pain. Just this year, the city was forced to lay off 15 workers, eliminate dozens of seasonal positions and cut funding to many worthwhile local organizations, largely because Maytag‘s tax bills went down.

Times are tough, Schornack thinks, when the city can’t even fund its own municipal band. These problems resulted from a change already in place. Looking ahead, it’s already clear that Maytag taxes will be going down again. And if any Maytag facilities are closed in the Whirlpool merger, it will mean yet another set of problems.

Taxes already lost

Ironically, a major cause of Newton’s 2005 budget problems was a decision made for Newton’s benefit 10 years ago by state lawmakers.

Back then, Newton was competing with an Illinois Maytag factory for the chance to build the then-new Neptune washer. To boost the incentive package offered by local and state officials, the state legislature voted to abolish taxes on new factory machinery and equipment and phase out taxes on existing equipment over a 10-year period.

The phase-out ended last year, and Newton’s tax revenue dropped by a half million dollars. That was the primary cause of this year’s layoffs and cutbacks at city hall.

Looking ahead

Meanwhile, Schornack points out another disturbing development: The value of Maytag‘s 30 properties in Newton fell by $2.36 million in 2005. Company officials asked for a reduction at its Plant 2 and headquarters buildings ,and the county assessor agreed. Taxes are based on property values, so lower values mean lower taxes. Therefore Newton will capture $38,000 less in taxes next year, based on current levy rates.

Maytag also has more than $1 million in property that is exempt from taxes this year because of tax abatements. And the rollback on residential property values is expected to decline 3.7 percent, so the city will receive less tax revenue from homes as well.

And then there’s the question of Maytag‘s future.

Looking at Maytag‘s big, blue lights from his office at city hall, Schornack wonders whether appliance industry analysts will prove to be correct. Many of them believe that if Whirlpool succeeds in its Maytag buyout, it will close Maytag headquarters, maybe as early as the first quarter of 2006.

A blow to a growth plan

Such a scenario could wreak havoc with a major Newton tax increment financing fund, Schornack says.

Since it was created in 1986, the North Central Urban Renewal Area has seen property valuations grow within its district by nearly $40 million. However, the taxes on this growth all go to a Newton TIF fund, with the proceeds paying off debt the city has accumulated in helping the district expand.

Newton has spent $22 million for roadwork, streetscape and infrastructure in the area but still owes more than $7 million. And the Maytag headquarters building is by far the largest property tax payer in the area.

The TIF fund gets 78 percent, or $479,00, of the $608,000 in local property taxes that Maytag pays on the headquarters building. Without that money, Schornack says, the revenues from the area may not be enough to pay the outstanding debt.

“That could hammer that TIF fund to the point that we may not have enough to pay our debt obligations,” he said. “We may have to renegotiate some refinancing.”

A delayed impact

Schornack knows he has some time before drastic impacts to Newton’s budget could be felt. Values assessed in 2005 will determine the taxes paid in 2006 and 2007. The merger appears unlikely to be completed before valuation figures come out next year, which means the city has at least until 2008 before the revenue crunch sets in. But the impacts could be severe, not even counting what could happen to residential and commercial property values in the future. Pull Maytag out of the property tax mix and Newton may have difficulties down the road in providing basic services to its residents.

“We’re talking about jobs if we’re required to cut much more from the General Fund,” Schornack said, noting that 80 to 85 percent of city expenditures go to salaries and benefits. “There’s not much left. We’re talking about closing down complete departments.”

Tomorrow: A detailed look at the city’s tax situation, past and present.


Life aftr Maytag: Former workers following new paths

November 23, 2005
Life after Maytag: Former workers following new paths, business opportunities, personal passions
Date November 23, 2005
Section(s) Local News


There’s no question Maytag has been the premier employer in the area for generations. Landing a job there meant employment security, great pay, benefits and a sound retirement, plus a chance to work on a national playing level.

When Maytag asked someone to come aboard, few turned it down.

“It’s hard to say no to what’s definitely the premier job for the area,” said Mark Larson, who for 15 years worked in plant engineering at Maytag after being plucked from his draftsman position at a Grinnell firm.

Maytag‘s premier employment status is pretty simple to understand. You don’t often find a Fortune 500 corporation doing more than $4 billion in sales in a rural county-seat town of 16,000 people. Besides Maytag, Prudential is the only other Fortune 500 company in the whole state.

“There are not many jobs like this in Iowa,” said Kristi Lafrenz, who worked in marketing at Maytag for 15 years. “I felt lucky.”

Over the last few years, however, that status began to ebb. As the appliance maker’s fortunes slipped, it reacted by jettisoning employees in wave after wave of downsizing initiatives. In 2004 Maytag announced a restructuring endeavor that would eliminate 20 percent of its salaried workforce with hundreds and hundreds of jobs lost at its Newton headquarters. Production jobs in Newton also have been hit with round after round of layoffs bringing employment levels to just over a third of what they were a few years back. Maytag won’t say, but anecdotal evidence suggests as many as 2,000 jobs have been lost since 2001 at Maytag operations in Newton.

And now Maytag employees await shareholder and regulatory approval for rival Whirlpool’s $2.7 billion takeover offer. If completed as planned early next year, some suggest that all Maytag operations in Newton will close, bringing to an end Newton’s reign as the “Washing Machine Capital of the World.”

So, what’s life like after Maytag? What have those who’ve already left done and what can those who may find themselves in the same boat expect and learn from those who’ve gone ahead? Here are their stories.

New Paths

Larson, the former Grinnell draftsman, was scared to death as a member of the Class of 2003, a sardonic title some former Maytagers have tagged themselves after being forced out of the company. He didn’t see it coming.

“It scared me,” he said. “I got to work not knowing. How was I going to make up that income and benefits?”

Wayne Johnson’s feelings were hurt when a Maytag official tapped him on the shoulder and showed him the door during the first wave of downsizing in October 2001. After giving more than 12 years to the company, it was hard to come to terms with the fact that the work he had been doing was not appreciated, he said.

Mark Monroe held a fair amount of anger after being let go last year after 20 years with Maytag. But at least the company waited until the day after he returned to work after chaperoning his son’s high school band trip to New York City, he says with a hint of animosity. Two other chaperones on the trip were asked to leave the same day.

Larson’s fear of unemployment didn’t last long. Four days after leaving the corporate fold he was offered a position with a big contracting firm. But something told him to go slow.

“I didn’t want to get trapped into something I didn’t like,” he said. “I had a feeling that I didn’t want someone having that much control. I didn’t want that tap on the shoulder again.”

So he took his time. The severance package Maytag provided allowed him to spend the whole summer with his daughter, even taking a month-long trip to the Black Hills.

“I took some time to think what I wanted to do,” he said.

With his building plans background, he thought he might enjoy selling the finished product. He took his real estate exam and began selling homes at a local firm. But the divorced father found that raising his daughter on a straight commission was tough work. He took a draftsman job at an area firm, but he still wasn’t comfortable. Then he received a call from Geri Doyle, who along with Caren DeVoe was opening a new Iowa Realty office in town. They needed someone to handle the detail work at the new firm and thought he might be interested.

“There’s kind of an underground network of people looking out for us,” Larson said from his office at Doyle and DeVoe Realty in Newton.

The bustling real estate office atmosphere suits him fine.

“I’d be lying if I didn’t say I miss the income and benefits,” he said. “But I wanted to look for something smaller, more close knit. I don’t want to be a number. I enjoy what I’m doing here. Money isn’t everything. Leaving Maytag enabled me to gain some introspection on what’s important in life.”


Although Johnson’s feelings were hurt when Maytag let him go, in hindsight he says it was the right thing at the right time.

“I was at a point in my life where I was reassessing my situation,” he said. “I knew I was not happy where I was at.”

Johnson also was pragmatic about his departure.

“I understood we had a business arrangement just like any other supplier,” he said. “I quit taking it personally in a relatively short time. Maytag did everything for me they said they would do. The guy who told me I was gone I still consider to be a friend.”

That pragmatism led Johnson quickly toward his new career path. He’d always had an interest in financial planning, and the separation gave him the freedom to pursue that arena. Four months after being let go he began working from his home as an independent financial advisor affiliated with Waddell & Reed Financial Services. Early next year, he’ll finish his fourth year in the business.

“I like running my own business,” he said. “Some days I’d like the security of a paycheck, but there’s a variability now that wasn’t there before. I’m happier now than I was then and I’m better off than if I was still there. My business continues to expand and I can run it the way I feel comfortable with. I can focus on clients, rather than managers, because that’s what’s really important. In your own business, security is the choices you get to make.”


Monroe also had been frustrated in his position at Maytag and had been considering leaving. Still, he was caught off guard when he was downsized out of the corporation early last summer.

And, like Johnson, he realized it wasn’t anything he did or didn’t do that earmarked him for elimination.

“It wasn’t about me,” he said. “They eliminated positions.”

But Maytag was all he really ever knew, starting there fresh out of Oklahoma State in the mid 1980s. Now he was faced with something new, how to go about looking for a job.

With his experience in computer programming, he knew he could quickly catch on with a Des Moines insurance company.

“But then I remembered why I didn’t want just to be a programmer,” Larson said. “Writing accounting programs is boring.”

So he looked around, wanting to stay in Newton while his children finished school and remaining among long-time friends, many of whom also were facing career path interruptions.

With financial assistance through provisions in the North America Free Trade Agreement, Monroe began working toward his doctorate degree at Iowa State University in Ames with a focus on human/computer interaction. At the same time he found an adjunct professor position at William Penn College in Oskaloosa. This fall he began a full-time position at Marshalltown Community College as an assistant professor of mathematics and computer science. He teaches two statistics courses, two general math courses and his favorite, a Web design and programming course.

Monroe remains bittersweet a year after his departure from Maytag.

“I was very stressed and angry,” he said. “I wasn’t happy. I’m a lot happier now, and I think my wife would agree.”

Business Opportunities

Not everyone leaving Maytag has been tapped on the shoulder. Some have chosen to leave the Fortune 500 company to start their own endeavors armed with the skill sets the corporation has fostered during their stays.

Such is the case for two former Maytag marketers, Kristi Lafrenz and Jill Hair, who left this summer to start their own company, “spark 2, Marketing Minds for Hire.”

Both Newton women have extensive marketing backgrounds. Lafrenz spent 15 years at Maytag in a variety of sales and brand management functions. Hair spent five years at Maytag before leaving to do freelance work and a stint at Blue Cross. She rejoined Maytag two years ago where the pair were reunited in Maytag‘s recently created strategic initiative group. It was there that the entrepreneurial spirit bit.

Maytag marketing’s strategic initiative unit was charged with creating, constructing and marketing new lines of products outside the typical sphere of home appliances, like the Maytag Skybox personal beverage dispenser, an immediate hit with Sunday afternoon TV football jocks and hosts of Wednesday night poker games.

“It was like being an entrepreneur within a large corporation,” Lafrenz said. “It planted the seed.”

Lafrenz and Hair also say they are following a growing trend among women who are leaving the corporate world to start their own businesses. As the mothers of young children, the two felt they would be able to have the flexibility of being around when their children needed them at the same time continuing their professional aspirations.

“It lets us ensure that we have the flexibility to be there for the kids,” Hair said.

“It lets us be the master of our own world,” Lafrenz compliments her partner’s statement.

Their goal is to create a virtual network of marketing expertise. The professional contacts they’ve made working in the corporate world will enable them to find and fit the particular experts to any client’s need.

“We’re forming a consortium of freelancers, many of them women who have left the corporate world,” Lafrenz said. “We’ll use different groups for different projects, a virtual agency, to help our clients’ strategic needs.”

“We’ll find the best fit for the customer,” Hair adds to her partners assessment.


Don Fisher is the epitome of what on-the-job Maytag training can lead to.

Seventeen years ago, the Newton native followed his grandfather’s footsteps and walked into the sheet metal shop at Maytag Plant 2. But it was his move to the corporation’s research and development model shop a couple of years later that eventually paved the way to the business success he enjoys today.

In research and development, Fisher was trained to take an engineer’s theoretical machine concept and turn it into a finished product prototype. Using state-of-the art injection mold and computer numerical control equipment, he helped Maytag engineers master the designs for the corporation’s continuous stream of new products. For the next 10 years, Fisher worked on the designs for Maytag‘s new platforms, including its state-of-the-art horizontal axis washing machine, Neptune.

“I was just an old woodworker when I started, but they trained me,” Fisher said.

But by the late 1990s Fisher was growing anxious. Then CEO Lloyd Ward was talking strongly about putting Maytag‘s research and development in a Chinese locale.

“I decided I better start looking for something else to do,” Fisher said.

Fisher put together the funds necessary to buy some used injection mold and CNC equipment. He opened his own prototype parts company, Product Development Partners, but continued to work for Maytag, moonlighting at his new company on the side.

For the next several months, Fisher weighed the pros and cons of striking out on his own. First on his list of concerns was the pay and benefits Maytag offered.

“I was a nervous wreck,” he said. “I thought I would retire there.”

In February 2000, Fisher jumped and made the leap to life after Maytag. Five years later he says he made the right choice.

“I couldn’t continue to do both jobs,” he said. “I had to make the decision of whether to stay or go. I decided to control my destiny.”

Today Fisher makes prototype products for a variety of national manufacturers. He continues to expand his client base and has expanded his operation, now employing three full-time workers and one part-time employee.

Ironically, Fisher has been able to offer employment sanctuary to two former co-workers who were walked out of the Maytag R &D model shop last year. Mike Urias spent 28 years at Maytag before being let go last June while Kevin Shipley had marked more than 11 years when his position was eliminated. Both men come from families with generational ties to Maytag. And both are appreciative of the opportunity to continue with the work they’ve enjoyed.

“Don has offered us the opportunity to do the same type of work here,” Shipley said. “Karma sometimes does great things.”


King joined Maytag in November 1979 and for the next 11 years provided environmental analysis on the by-products emanating from production operations at Maytag Plant 2. In the late 1980s, however, he saw an opportunity to establish a business that would meet the growing environmental analysis needs of individuals, businesses and government operations around the state and beyond.

“A lot of my friends were checking my sanity, but it was one of those things that come along once during a career,” he said. “Either you make a go of it or you’re left wondering.”

King gathered the requisite financing to get the operation off the ground. He opened his doors in January 1990 moonlighting as the sole employee at his new Keystone Laboratories — named after his favorite skiing locale in Colorado — while continuing his work at Maytag. Six months later, he left Maytag to focus full time on his fledgling business.

Fifteen years later, although not all a bed of roses, his business idea has proved successful. He currently owns three environmental laboratories in Newton, Waterloo and Kansas City, employing a total of 42 people, 32 of whom are based in Newton. He’s conducted environmental testing projects all over North America to the Virgin Islands, from Anchorage, Alaska to San Juan, Puerto Rico.

“I’ve been real fortunate and I’m very thankful,” he said. “I was a chemist who had to learn how to run a business.”

Personal passions

Most of the people who have been let go from Maytag have received the perfunctory “tap on the shoulder.” Doug Gibson did the tapping.

With 23 years in at Maytag, Gibson had seen the work environment change. Instead of the days when the going to work created a sense of excitement and movement, round after round after round of layoffs had taken its toll. He often dreaded the start of a new work week, finally realizing why he’d become so grouchy on Sunday nights.

Maytag used to be a great place to work,”Gibson said. “Now you’re just waiting for your turn.”

By late 2004, Gibson realized he would not likely be retiring from Maytag. That meant he would need to find something else to do. His youngest child had just left for college so the time felt right to try something new.

As an electrical engineer, one might think Gibson would opt to move into something he knew well. But he’d had enough of the conveyor controls and power lines that were his life at Maytag.

“I went to my boss and said if there was going to be another ‘double E’ position eliminated, make it me,” Gibson said.

Boom. A few weeks later he was gone.

When not working at Maytag, Gibson loved to backpack. He’d taken hiking trips to Colorado, Wyoming, Arkansas and haunted the Yellow River Forest area of northeast Iowa for years. So, he thought, why not turn his avocation into his vocation.

With the assistance of NAFTA money, Gibson is now taking classwork at Iowa State on a bachelor’s degree in animal ecology with an ecology option. He’s involved in a graduate level Global Information Systems project where he’s helping plot prairie remnants across the state. A year from now, he should be close to completing his degree with hopes of securing a position in county conservation or with the Department of Natural Resources. But before he begins any new assignment, he’s going to do something he’s never had the time to do before, walk the Appalachian Trail.

“I feel like I’m moving forward toward something,” Gibson said. “I’m glad I went to my boss. I haven’t regretted it yet. But be careful what you ask for, you just might get it.”

And, he notes with a smile, the Sunday evening tone in the Gibson household has improved dramatically.


If anyone exemplifies the success and satisfaction of following one’s passion, it’s Amy Doerring.

For 17 years, the last 10 at Maytag in Newton, Doerring was immersed in the corporate world of information technology. But now, more than three years after being let go by Maytag, she’s traded her megabytes for megapixels as her photography studio continues to grow.

“I had an interest in photography for a long time and now I had the opportunity to do what I wanted,” she said. “But I didn’t know if I had the courage to do it.”

With strong support from friends and family — she was sent congratulatory plant arrangements upon her departure from Maytag in March 2002 — she pulled up her boot straps and went to work. That summer, she set up a sales booth as part of Newton’s annual Ridiculous Day sale and lined up several senior picture portrait sessions. The rest is history.

Today she operates Amy Doerring Photography out of a recently renovated third floor studio at her home. Her client list has grown to include regular customers from all over Iowa, as well as Minnesota and Nebraska.

And Doerring’s is not the typical studio photography work. As often as not, you’ll find her at shooting sessions at some of her favorite light-meets-textured-walls spots around town, such as near the old railroad depot and the former Jasper County Jail building.

“My tag line is ‘still photography, moving images.'” she said. “That’s what I want to create.”

She credits bringing the creative process to her photography work from her continued study of art history. Seeing how the great artists have used light and shadows to create mood and effect is something she continuously tries to improve upon in her photography work.

“I want to get better and better,” she said.

Another important aspect of her efforts go to what she calls her “heart’s work.” She recently completed a photo montage of a young boy stricken with a brain tumor and has helped out Annie Wignall’s Care Bags program.

“It allows me to give something back,” she said.

Looking back, Doerring can better see what her departure from Maytag has meant.

“It gave me wings so I could fly,” she said.

Newton Daily News holds community forum: Outcomes

October 20, 2005

Newton Daily News

On Oct. 19, 2005 the Newton Daily News hosted a local forum as part of its on-going effort to inform the community about the latest developments concerning the Maytag buyout and how the 112-year-old company’s possible departure might impact the community. The newspaper invited a broad spectrum of local business, industry and government leaders to participate in the day-long session entitled “Forging Ahead: A Community Dialogue.”
The forum’s goal was to look collectively at the potential risks to  Newton and Jasper County should worst-case scenarios develop, identify the community’s strengths and brainstorm on possible strategies that can foster new arenas of economic vitality and community growth.
Approximately 100 people attended the event, which was moderated by Steve Gray of Canton, Mass., former publisher of a family-owned newspaper in Monroe, Mich., and past publisher of the Christian Science Monitor.

Potential Risks
The day started with the group identifying the risks the community (early on it was made clear that community meant the entire county) may face if Maytag leaves. Here are the possible dangers named by forum members:
• Loss of tax dollars from Maytag closing its operations
• A declining student population
• Loss of Maytag employees and the skill sets both the corporate and
manufacturing employees possess
• Loss of retail
• Larger unemployment levels
• Lower community morale
• A decline in housing
• Loss of identity
• A decrease in charitable giving
• A loss of the safety net for the community’s most vulnerable
• Loss of friends and neighbors
• Increased anger/hostility
• Increase in crime and the associated social impacts
• A decline in community services
• Loss of perceived opportunities
• Loss of services for at-risk children
• Loss of diversity
• A lessened standing in the state
• Increased health problems due to the stress of job loss
• Losing a sense of entitlement
• Increased divorces/family problems
• A thinning business community
• Increased bankruptcies
• A reduction in Maytag business opportunities
• A decline in the local infrastructure
• Loss of a sense of security
• Loss of city bonding capacity
• An increase in situational poverty
• Loss of the intermodal rail facility
• Loss of entrepreneurs
• Loss of young adults
• Loss of community momentum
• Increased business closures
• Loss of Red Pride
• Increased substance abuse
• Increased negative media coverage
• A decrease in the standard of living
• A decrease in the quality of the educational system
• Loss of the arts community
• Increased stress on children
• Difficulties in attracting new businesses/families to the community
• A decline in the commuter retail business sector
• A negative impact on the agricultural sector
• Loss of the employee talent pipeline
• Declining population
• Loss of long-standing non-profit betterment groups (Project Awake,
Renew Newton)
• Increase in crime and the fear of crime
• Declining community aesthetic appeal
• Loss of DMACC, Buena Vista
• A loss of philanthropy from Maytag
• Reduced state revenues due to population declines
• An increase in naysayers
• Loss of hope
• Loss of the volunteer base
• Sense of a loss in the quality of the community
• Loss of political influence on the state and federal levels due to
the loss of Maytag
• Being positioned as Whirlpool’s “mother-in-law”
• Empty Maytag buildings
• Negativity becoming a bigger factor
• A decrease in the capacity to care for the community’s elderly
• Generational disconnection over Maytag experiences
• Loss of choices/control over the future
• Less reasons to come to Newton
• Perceptional cost of labor
• “Change paralysis”
• Fear of failure
• Holding on to the past
• Loss of tourism
• Loss of inbound traffic
• Fear of a decline in economic wealth standing
• Increased rumors
• Loss of recreational opportunities/free family activities
• Believing there is no life after Maytag

Community Assets/Strengths
Gray then asked the forum participants to identify the resources and assets available in Newton and Jasper County. Using an analogy from the movie “Apollo 13,” he asked the participants to consider what Newton has on the table, so to speak, that could be helpful in developing strategies for continued health and growth in Newton and Jasper County.
Here are the current strengths and assets named by the group:
• An aggressive economic development program/success of JEDCO in securing the forthcoming construction of a biodiesel plant.
• 1,500 available production workers
• Strong local companies
• Experienced workforce
• Strong education system/preschool to master’s degree availability
• A growing population base
• A resilient and strong housing market (less than 10 percent of current sales are due to Maytag employment/costs are below state average)
• Strong amenities countywide (parks, preserves)
• Active community improvement organizations (Project Awake, Renew Newton)
• A tradition of working together to improve the community
• Strong medical facilities (Skiff hospital) and medical practitioner base
• Infrastructure capacity (sewer, water)
• United Way seeing an increase in donors
• Des Moines developing on the east side
• Location on Interstate 80
• Renovated, updated airport
• Wealth to spur entrepreneurship
• Excitement that change can bring/momentum
• Large, highly qualified employment pool
• Active, numerous volunteer base
• Revitalization through arts (small business opportunities)
• Low employee turnover
• Organized labor
• Two wineries
• Pool of young leaders
• Quality of life
• Quality retirement centers
• Great place to raise kids
• Diverse group of financial lenders that are pro-growth oriented
• Newton Public Library
• Community Theater
• Maytag Park and Maytag Park Pool
• Progress Industries
• Capstone
• Teen Center
• Drive-in theater
• Maytag Dairy Farm
• Newton Arboretum
• Westwood Golf Course
• Hike and bike trails
• Jasper County Museum
• Wrestling Museum
• Renovated schools
• DMACC/Conference Center/Buena Vista
• Neal Smith Wildlife Refuge
• Salvation Army
• Local churches
• Day care/adult day care
• The vitality in the county’s towns
• Full-time emergency medical care/full-time fire department
• United Way (goal of $418,000 this year)
• Iowa Speedway
• Early childhood development programs
• Workforce development office
• Civic events (Fourth of July/Courthouse Christmas Lighting, etc.)
• Thirty minutes to/from Des Moines
• Leadership transition
• Proximity to state universities
• Local foundations
• Survivor attitude
• Physicians/specialists
• Low crime rate/safety
• Post-Maytag success stories
• Locally-based entrepreneurship opportunities by Maytag employees
• DMACC experience
• Maytag Family Foundation
• Local cable access channel (could be utilized more)
• Chamber of Commerce
• Midwest work ethic/commitment to families
• Keep faith with one another/follow through on commitments
• Underutilized intermodal facility
• Viable railroad
• Ex-Maytag business contacts
• Whirlpool opportunities
• Civility
• Broadband Internet
• Elderly care
• UAW involvement in the community
• Globalization opportunities
• Newton alumni as a resource
• Basics and Beyond alternative high school program
• Spiritual leadership
• Public/private collaboration
• Small busiensses
• Ecumenical heritage
• Location/tourism
• Hunting
• Prison labor
• Change of seasons
• Civic groups (Rotary, Kiwanis, etc.)
• Growth in cohesiveness
• History of community mobilization (Keep Maytag in Newton)
• Red Pride
• Opportunity for community to mature
• OPEN/sister-city relationships
• Sense of community ownership/pride
• Courthouse
• Agricultural opportunities
• Local media
• State resources/lawmakers intune to Newton
• Mayor at the statehouse
• State Rep. Dennis Black intune with Altoona (his district includes it)
• Growing business opportunities outside the area
• Affordable housing
• Commitment by residents to the area
• Small business community
• Sculptures/murals (Sculpture Festival)
• Animal care
• County Extension
• Rock Creek (county parks)
• Neighborhood schools
• Stable teacher staff
• Jasper Community Foundation
• Newton Development Corporation
• Training opportunities/facilities
• Employer/education partnerships
• Ample city of Newton bonding capacity
• Jasper County listed in top 10 among Iowa counties as a creative environment to foster entrepreneurship and new economic development opportunities (University of Iowa Study by John Solow)

At the conclusion of this section of the forum, moderator Gray offered his perception on the assets listed by the group.
“It sounds to me like Newton and Jasper County are more of a community than a lot of other places. In hoping to attain new jobs and residential growth, that is an intangible that is a massive, rich thing,” Gray said, noting that strength could play a large part in the community’s future strategies.

The newspaper-sponsored forum attendees then spent considerable time identifying specific strategies the community might adopt to shape its future. After the group’s suggestions had been captured, each participant was invited to cast five “votes” to identify the five ideas they felt had the most promise.
Following is a brief description of the strategies generated. At the end the strategies are ranked according to the consensus attendee perception of importance.
• Since the community has a strong base of current and former Maytag employees with many skills and abilities, efforts could be made to utilize those skill sets to make Newton the focal point of a technology corridor running between the two state universities in Ames and Iowa City.
• Do what we do best. In Iowa, that’s cultivating crops and raising livestock. Efforts could be made to develop processing, packaging, transportation and storage facilities for the sale of Iowa crop and animal products around the world.
• Develop a comprehensive, one-stop Web site where companies and individuals could learn all the advantages of locating in Newton and Jasper County.
• Create an incubator system to assist individuals in nurturing their business plans. Both Maytag and non-Maytag people could be targeted. Business plans with great merit could receive various types of assistance.
• Promote community-based entrepreneurship with support programs to spur job growth in the area.
• Promote the development of the arts and related economic development benefits. A local group is currently working on a plan to develop a foundary for casting art pieces.
• Look at developing value-added agriculture processing businesses that use new technologies.
• Create “away teams” to visit and learn from communities that have successfully recovered from major job losses.
• Explore supplier chains that local companies use and potential recruit supplier companies to the community.
• Expand 101 things best about Newton to a state, regional and national advertising campaign. Tell Newton’s story outside the immediate area.
• Use existing conference facilities to draw state and regional conferences to Newton. Should Maytag properties come open, potentially expand current facilities within the available property. Coordinate these efforts with the Christian Conference Center.
• Should Maytag property come open, attempts to attract Des Moines insurance company expansions to Newton could be made.
• Launch a major “Keep Maytag (or Whirlpool) in Newton” effort. Visits with Whirlpool officials should be made to encourage use of current Maytag facilities for Whirlpool operations. The message has to be given that Newton has much to offer and can become an integral part of future operations for the expanded corporation. Point out that Newton can change from a “cost center” to a profit center. Such a mentality change can be beneficial to Newton.
• Approach other local companies about their needs and recognize their contributions to the community. Explore how public/private partnerships might help them grow.
• Assemble a team of people who can travel at a moment’s notice to respond to potential business opportunities for the community.
• Establish a database of Maytag employees and their particular skill sets.
• Work closely with state legislators.
• Establish a local networking system to help local business people explore growth opportunities. The network could include business problem-solving and support services and could expand business contacts.
• Establish a local health insurance program as a means of bringing development to the community, as Wisconsin has done.
• Develop a business corridor parallel to I-80.
• Continue efforts to revitalize the downtown area in Newton.
• Market the Maytag distribution facilities in Newton. The company has a 175,000 square foot space with 10 docks on 20 acres. This could be tied to promoting increased use of the intermodal facility for shipping purposes. The high cost of gasoline and diesel fuel make rail shipping more cost efficient for distributors.
• Better city/county cooperation, especially on economic development. Local elected officials need to understand the importance at this juncture of working together for the betterment of the whole community. Leadership work sessions between all local governments could be established.
• Look away from manufacturing toward other sectors of the economy – such as services, technology, health care, artisans – for expanded development opportunities.
• Develop a leadership strategy process/program.
• Create a jointly-funded grant writer position (United Way model) that can apply for grants to help fund local growth initiatives (i.e. incubator system for entrepreneurs).
• Make the community’s presence and rich resources known to business relocation firms.
• Come up with a plan for redevelopment of Maytag properties. Develop plans that would include city and county financial assistance/incentives for the potential use by new firms
• Move away from an “us-versus-them” mentality in local leadership/city government.
• Explore the possibility that current Maytag employees/investors might want to buy the plant and begin their own product line should Whirlpool not want the property. Also look at foreign firms that might have interest in having a U.S.-based manufacturing operations.
• Lobby federal lawmakers.
• Take advantage of Iowa’s strong educational system by attracting international students to educational opportunities in the community. Also conduct English language instruction to foreign students out of a system based locally.

When each participant was asked to identify the five most promising strategies among those above, the top vote-getters were as follows:
45: Campaign to keep Maytag/Whirlpool in Newton
36: Develop a Newton/Jasper County traveling team to pursue potential business opportunities
35: Develop comprehensive website to showcase the community’s assets
30: Promote better working relationships between the city and the county
25: Create jointly-funded grant writer position
24: Pursue non-industrial growth (services, technology, healthcare, arts)
23: Tell Newton story (ad campaign) to a broader area.
17: Move away from “us-versus-them” scenario
13: Develop Maytag employee skill sets by reaching out to entrepreneurs.
10: Expand educational opportunities/programs to promote development and growth.
8: Do on-site visits of successful communities.
8: Promote best business plan development.
7: Develop and expand use of the intermodal facility.

Forum participants concluded the day by discussing how the ideas above
could be turned into action.
While most felt it was important for the community to tell its story to Whirlpool – and the benefits the expanded company could glean from a continued presence in the community – it was the consensus that the community should not adopt an “all our eggs in one basket” model approach.
Several people argued, to what appeared to be general approval, that the effort should be made, but that the intent and approach should be much different from the “Keep Maytag in Newton” campaign 10 years ago.
The standard economic model has been to tell a company how many “goodies” the community can give away to win an employer. Today, however, the company needs to understand the “goodies” Newton has to offer and why the company might want to locate here because of them.
Forum participants also discussed what efforts should be taken next, how the momentum generated at the meeting can be continued in the weeks and months ahead.
The barriers between development entities, the group concluded, must be broken down so a broad-based effort can move forth. Barriers to progress need to be broken down and replaced by an inclusive, broad-based mindset: positive movement toward constructive solutions.
The group said the City of Newton’s Community Development position, the Newton Development Corporation and Jasper County Economic Development Corporation should work more closely together.
It was also suggested that specific efforts can be undertaken. Individuals can be assigned responsibilities, such as securing a grant writer to help finance development initiatives (i.e. finding seed money from philanthropic groups to develop an entrepreneurial development incubator system.)
Efforts to foster an expansion into service, technology and health care segments of the economy can be initiated as well as fostering new strategies in developing educational offerings (i.e. foreign language programs for international students).
Others said the new mindset must also include new modes of thinking about community. Partnering in a regional marketing initiative can expand the local capabilities to foster growth while leveraging current resources. Local networks can be established that both improves communication and strategies for development.
Moderator Gray ended the day by urging participants to communicate a sense of movement, action, progress and participation with others in the community.
“If your goal is high, don’t shoot low,” he said.

Local groups discuss possible loss of Maytag

October 20, 2005
Local groups discuss possible loss of Maytag
Date October 20, 2005
Section(s) Local News


Strategies to spur business growth and job opportunities in the face of the possible loss of Maytag were discussed by about 100 community leaders gathered at a day-long forum sponsored by the Daily News.

Business, industry, labor, education, social service and local government officials from throughout Jasper County gathered at the DMACC campus Wednesday to take stock of the community’s current situation — the risks it faces, the assets it possesses and promising opportunities for successful outcomes.

The event, “Forging Ahead: A Community Dialogue” was put together by the Daily News as part of its on-going effort to focus community attention on the broad-range impacts of Maytag‘s potential closure. The event was facilitated by Steve Gray, a former editor and publisher of a family-owned newspaper in Monroe, Mich., and past publisher of the Christian Science Monitor.

In his opening remarks to the broad-base of guests, Gray likened Newton’s situation to a group of people in a raft heading toward Niagra Falls.

“We all share the same risk or jeopardy,” he said. “We have to think how we can all avoid the dramatic danger.”

After spending the morning identifying specific risks to the community should Maytag leave and the assets the community has to offer, attendees focused attention on what strategies might be best for the community to follow and what specific opportunities exist for growth outcomes.

A wide-range of possibilities surfaced. Attendees felt some effort should be made to contact Whirlpool officials about the benefits it could see by keeping local Maytag operations, although an “all our eggs in one basket” approach to new job creation opportunities should be avoided.

Other tactics identified for their potential benefits included the development of an “away team” that would be prepared to travel and tell Newton’s location benefits to business and industry, a comprehensive Internet site for use by business locators, fostering better relationships between city and county governmental agencies, creation of a grant writing position for job growth benefits, efforts to expand the local job base beyond its industrial emphasis toward technological, health care and service industries and national, regional and local advertising efforts to tell Newton’s story.

The group also discussed the potential for helping to foster new business ventures by displaced Maytag workers. An entrepreneurship incubator program could be developed that could take advantage of the varied skill sets held by current Maytag employees. The use of angel funds and philanthropic donations to help set up these programs was also suggested as a method for financing such efforts.

The possibility of an employee-owned Maytag operation was also discussed should the plant close sometime in the future. Expanded use of the community’s intermodal railroad loading facility was also targeted as an opportunity, especially with the vacant warehousing space that exists near Maytag.

The brainstorming ideas generated at Wednesday’s meeting will be tabulated over the next several days and posted on the Daily News’ Web site,

New models drive economic growth

October 17, 2005
New models drive economic growth
Date October 17, 2005
Section(s) Local News


If Maytag were to close, what would save Newton and Jasper County?

Would it be another Maytag? Could the city and county be successful at landing another big manufacturer with hundreds or thousands of jobs?

Not likely these days, the experts say. The days of chasing smokestocks appear to be nearing an end.

But it just might be another Frederick Louis Maytag, a Newton farm-hand who grew his big idea for a new product into a dominant position in the world.

Many new answers for community recovery have emerged in recent years as hundreds of communities have been forced to look for creative solutions after suffering massive job losses. One of the most promising of those is community-fostered entrepreneurship. Industry clustering, regionalism and philanthropy are several more.

In a search for solutions that might work for Newton, the Daily News looked around the country to see how other communities had successfully met similar challenges. Here’s what we found.

Rural Uncertainty

As director of the Center for the Study of Rural America, Mark Drabenstott says Newton is not alone.

“What Newton is passing through is a trend happening in a lot of places,” the Iowa State University-educated banker with the Federal Reserve in Kansas City says.

Globalization, Drabenstott says, is reshaping all facets of the U.S. economy. Rural areas, he says, are being especially hard hit because they have typically built their economies around single business activities, whether it be agricultural, like processing beef, or industrial, like building washing machines. When companies find this work can be done more efficiently or at lower cost in other parts of the world, these rural communities often have little else to offset the losses. The result is often a downward spiral.

What can a community do?

Creating an environment that fosters local entrepreneurs could be a big part of the solution, Drabenstott says.

“Newton has a choice,” he said. “Newton can try to hunt for the next Maytag, although I would argue it would be cost-exorbitant, and the likelihood for success would be low. The question is not how to attract and replace Maytag but finding the next Mr. Maytag and making sure you have enough of them in the pipeline that one might grow to a mighty oak.”

Eau Claire, Wis., is an example.

In the early 1990s, Uniroyal announced the closing of its tire plant there, putting about 1,400 people out of work. The community established task forces to deal with the immediate unemployment problems, job training issues and short- and long-term economic development efforts. Another group focused on what could be done with the 1.9 million square feet of empty production space.

But it was the vision of a local family that made all the difference, said Craig Carlson, industrial development director for Eau Claire at the time of the plant closing.

“I call it the eighth wonder of the world,” Carlson said.

The old tire plant was purchased by Cigan Properties –owned by Bill and Patti Cigan, and her son, Jack Kaiser. The property now houses more than 130 businesses, ranging from light manufacturing operations, commercial warehousing, service, retail, public/private offices and even a day care center. In addition, luxury warehouse style residential apartments have been constructed, as well as a 35-unit apartment complex.

Banbury Place, named after a tire machine used in the old plant, now employs nearly as many people as worked at the plant before it was shut down.

Carlson said it’s hard to imagine, but the closing of the tire plant has benefited the Eau Claire community.

“Long-term, it caused the community to come together,” he said. “It diversified the economy and brought about a positive outcome.”

Asset-based approach

Drabenstott warns, however, that a community’s focus on fostering entrepreneurship cannot be scattershot. It must focus on what the community can best bring to the global economic table.

“Your community has to do some soul searching,” he said. “The real onus lies with you. The answer to your economic future is not coming from Des Moines, it’s coming from Newton. You’re the captain of your own destiny.”

Deb Markley, co-director of the Rural Policy Research Institute’s Center for Rural Entrepreneurship, agrees. She says her work in North Carolina with individuals impacted by the downturn in the American textile industry shows successes can be found when individuals focus on what they do best.

Markley, whose institute just put out a new book, “Energizing Entrepreneurs: Charting a Course for Rural Communities,” notes that several textile firms have found success in niche manufacturing activities. One firm, she said, just opened a production facility for high end women’s apparel.

“You have to be rooted in reality,” she said. “You have to know what assets you have and build a world for tomorrow. You have to look where you want to be five years from now.”

Do what you do best

Looking ahead is what drove Jim Haguewood in his efforts to reverse the downward trends in his rural Washington state county’s economy.

For 20 years, Haguewood worked in the restaurant business in Port Angeles, Wash., a picturesque community in the state’s northern peninsula. But for all its natural assets, Clallam County had been in a state of decline for more than 30 years.

In 2000, Haguewood was recruited to run the county’s economic development council. Once on board, he soon realized that the traditional business recruitment model had not been successful. Slowdowns in the fishing and timber industry, caused to some degree by federal regulations, were forcing people to move. That hurt property values, the local tax base and retail activity.

Working with a Maryland consulting firm, ViTAL Economy, Haguewood pushed the area’s development efforts in a different direction. Again, it focused primarily on the area’s existing assets and how they could best be leveraged for success.

“To change a rural economy requires a facilitated disciplined approach,” he said. “It must start with community activation and assessment to determine the current community climate, strength of leadership, existing industry clusters, defining a goal, identification of key indicators to measure the health of the economy and, lastly, the development of a strategic plan.”

Community buy-in, coupled with a sense of urgency, are critical to success.

“This is the foundation to change a community culture,” he said. “The past approaches to economic and community development are not going to work in Newton and Jasper County in the future. The economy is changing and will not be the same again.”

In the past five years, Clallam Networks has proven successful. A new $23 million timber processing plant is near completion — the result of convincing business owners it made sense to process trees close to their source instead of trucking them hundreds of miles. And the new West Port Shipyards is producing 160-foot production yachts that sell for about $30 million each.

“What we’ve been able to do is change both the local belief that we had a terrible economy and the reputation that we were a bad place to invest,” Haguewood said.


Northwest Washington’s successes highlight another point stressed by Drabenstott: Future economic development efforts will likely need to focus on regions rather than stand-alone communities.

“Is Newton big enough on its own or would it gain power partnering with other communities?” he asks. “I feel that any region that does its homework, that’s willing to build new partnerships, will be given an edge in the global marketplace.”

A look north shows regionalism’s benefits and the power of non-traditional partners.

Joe Sertich knew the Arrowhead Region of northern Minnesota had been slowly bleeding for years. Twenty years ago, mining accounted for 50 percent of the jobs and 60 percent of the income. Today, it accounts for 10 percent of both.

In 2000, LTV Steel Mining Company closed, putting 1,400 people out of work. Other mines, paper mills and wood product plants were announcing layoffs or threatening to close. The region was in a serious decline.

As president of the Northeast Minnesota Higher Education District, a consortium of five community colleges, Sertich saw an opportunity for higher education “to serve as a catalyst and coordinator for the region.”

The goal, Sertich said, was to align the private sector, government and higher education under one umbrella with the goal of revitalizing the regional economy.

What local leaders realized, Sertich said, was that new opportunities were likely not to arise from outside the area but rather through development within the region. A strong emphasis was placed on putting together education and training programs for displaced workers.

The major emphasis was placed on technology.

“Technology supports the infrastructure that allows individuals to be more productive in the workplace and in their pursuit of opportunities as lifelong learners,” Sertich wrote about the Arrowhead model.

“Technologically trained and equipped individuals can be at the cutting edge of the changes and innovations that will serve the region.

“The greatest danger to the viability of rural communities is not globalization but a retreat into isolationism and protectionism, so technology was used as a tool to create living wage jobs across the region. This was the best way for communities to preserve their local control and become more competitive globally.”

The area has rebounded since the model was unveiled in 2000.

Blue Cross has an adjudication call center in the area. Delta Dental does billings while World Perks operates a worldwide reservation system. Software design firms are also growing.

“People grew up here often wondering who they were going to work for,”

Sertich said. “Now we are building an entrepreneurship model — find an asset, find a niche and push hard.”



The sandhills of northern Nebraska might not seem a likely setting for a cutting-edge economic initiative, but the Kellogg Foundation Board of Directors sees it differently. Earlier this year, the Kellogg Foundation awarded Hometown Competitiveness $2 million for its efforts to bring growth to rural areas.

Based in Lincoln, HomeTown Competitiveness provides a framework for rural communities to help them identify reachable goals and strategies designed to reverse rural decline. The plan is built on four cornerstones: building leadership and community capacity, engaging young people, fostering local philanthropy and supporting entrepreneurship.

Craig Schroeder, a program coordinator with the group, said HTC is an asset-based approach that attempts to bring the four facets together in a single drive toward community improvement.

“This is not rocket science,” he said. “We sit down with a group and look at where they are at, what are their goals and what challenges they face in bringing changes about. Then we look to see how we can leverage all that to revitalize the economy of the town.”

But the program’s entrepreneurship element has received some of the most notice. Nationwide, two-thirds of job creation and business growth comes from entrepreneurial ventures, according to the National Commission on Entrepreneurship. Chuck Hassebrook, director of the Center for Rural Affairs, said that is important, especially for rural areas.

“Small entrepreneurship is especially important as companies that formerly looked to rural areas are now moving offshore for lower wage labor,” he said in a statement announcing the HTC award.

“Entrepreneurial development keeps local people in control of their community’s future. It keeps profits at home and enables local people to build assets and earn middle class incomes.”

Maytag’s departure could cripple city’s budget

October 5, 2005


Newton Mayor Chaz Allen gave an upbeat assessment of Newton’s future in his State of the City address early this year. Residential and commercial property values had risen from the year before, he said, and a number of development projects were planned or completed that would boost the property tax base, including the $70 million Iowa Speedway.
“The state of the city is good,” he said.
Allen didn’t know it at the time, but Newton’s future was about to be rewritten. Several months after his address, Newton learned that Maytag might close its local doors. Some signs indicate Newton may be in a better position than first thought to weather such a blow. But the fact remains that closing the headquarters and production facilities in Newton could cripple the city’s ability to provide basic services to residents.
Not only is Maytag Newton’s largest employer, it is also the city’s largest taxpayer. It will pay $1.68 million in property taxes to all local government coffers this year, 56 percent of which go to City of Newton accounts. And regardless of Maytag’s future, the company is already assured of lower tax bills next year because of lower property valuations.
The growth indicators Allen mentioned in his speech won’t help the city fund the services it provides next year or likely anytime soon. In a nutshell, Newton’s financial condition looks worse this year than last year, when the council found it couldn’t even fund its own municipal band.
And that was with Maytag still here. Take the company out of the equation and it’s not clear what might happen. Much of Newton’s current financial trouble stems from actions taken long ago. At the time, they appeared to be the right things to do, but a look back helps to explain the city’s financial situation today.

Keep Maytag in Newton
In late 1993, Maytag dropped a bomb. The company announced that it would introduce a revolutionary new washing machine product that not only cleaned clothes better but provided significant water and energy savings as well. The Maytag Neptune was heralded as a breakthrough product in the laundry market, well above the bar set by Maytag’s other U.S. and foreign competitors. The only question that remained for Maytag was where the machine would be built.
At first, Newton residents seemed none-too-excited about the announcement. Surely, as Maytag’s flagship plant, the new product would be built in Newton, the initial reaction seemed. Maytag, however, was noncommittal. The decision would be based on where the most favorable economic conditions existed for the $40 to $50 million capital investment: Newton or its Herrin, Ill., laundry plants. Newton got the message. If the community was not selected as the site for the new laundry platform, there was a real possibility that local production could dwindle or even come to an end.

The community sprang into action. A Keep Maytag in Newton committee was formed. Letters of support poured into corporate headquarters. School children wrote emotional letters about what the loss of their mother’s or father’s jobs would do to their families. Banners lined the streets and avenues. Young and old rooted for the Maytag team at pep rallies in the school gym. If ever a community was behind its long-time corporate partner, it was Newton.
But the real work of deciding which community would come out on top was taking place behind the scenes. Each community was given an opportunity to address Maytag’s site selection team on what it could offer.
Newton city officials, aided by state economic development officials, put together a major package. Newton offered a $4.15 million economic development grant. The state provided $2.325 million in grants, tax credits and jobs training accounts. Natural gas and electrical utilities chipped in another $2.15 million in incentives. The county gave $2.5 million for the development of an intermodal railway loading station. The UAW Local 997 granted Maytag the right to bring in new hires at 70 percent of base pay with parity being reached over a three-year period. Herrin, too, offered a major incentive package.
On a cold day in January 1994, then-Maytag CEO Leonard Hadley announced the results. “Both our laundry manufacturing operations are very successful,” Hadley told a crowd of local leaders gathered at the headquarters. “But in the final analysis, our extensive study revealed that it would be most economical for us to locate this future production in Newton, and today’s highly competitive marketplace absolutely demands economical manufacturing.”
The community rejoiced – especially Maytag workers. “That big noise you heard was a sigh of relief,” said then UAW Local 997 President Rick Avery.

Machinery and Equipment tax
But one more hurdle remained. State lawmakers had to vote to eliminate the state’s tax collections on machinery and equipment, a significant part of Maytag’s decision to invest new capital at the Newton plant.
The debate was couched in terms of economic development. Proponents of the legislation argued the tax put Iowa at a competitive disadvantage in attracting new manufacturers to the state. Other states, including Illinois, did not tax companies on their capital assets. Lifting the disincentive would foster the growth of industrial and commercial development within the state. The new values of added industrial properties would offset any loss in M&E taxes to local governments, they argued.
Opponents said eliminating the tax could prove disastrous to the local tax bases of communities with a heavy industrial presence. Small cities like Fort Madison and Newton would be especially hard hit, opponents said, due to the value of the machinery and equipment as a percentage of the total assessed value.
In the end, lawmakers kept their promise to Maytag. A plan was put together where new M&E values would not be subject to taxation while existing values would be phased out under a 10-year declining reimbursement schedule designed to give communities time to accumulate new values to offset lost revenues.

Newton Budget
Newton’s problem is that other values have not grown enough to offset the loss of M&E taxes. In 1999, M&E values in Newton stood at nearly $32 million, 80 to 90 percent of it under Maytag roofs. Its final payment under the 10-year phaseout amounted to $457,000.
The end of that income, along with the loss of some other state aid and relatively stagnant local property values, left Newton with a severe budget crunch.
To make ends meet, the city was forced to cut 15 full-time positions, including police officers and fire fighters, eliminate about a dozen seasonal temporary positions, dip into reserve funds and severely curtail — if not eliminate — funding to a number of community organizations, including the YMCA, teen center, RSVP and the municipal band.
Newton City Administrator Dave Schornack shudders to think what might happen to city services and employee levels should Maytag close.
“If that happens, there’s not much left but salaries and benefits,” he said. “We’re talking about jobs if we’re required to cut much more from the general fund. We’re talking about closing down departments.”

Maytag’s taxes
Maytag’s dominance in the local economy is highly visible in the value of its 30 properties and the taxes they generate. The 112-year-old Fortune 500 company’s properties account for 82 percent of the total industrial value in the city. Its $39 million total assessed value this year is more than 10 percent of the city’s total tax base.
As the city’s single largest property tax payer, Maytag will pay a combined $1.68 million to all taxing jurisdictions this year, and 56 percent of that will go to City of Newton accounts.
But Maytag’s tax input in the local economy has already begun to fall. Earlier this year, Maytag officials approached county assessor officials seeking reductions in the values of its two largest properties, Maytag headquarters and its Plant 2 production facilities.
The headquarters received the largest reduction, dropping from an assessed value $14.1 million this fiscal year to $12.7 million for next year, a 9.8 percent drop. Maytag’s production facility also received a new valuation, dropping from $19.3 million in the current taxing year to $18.3 million, a 5.1 percent decrease. One commercially-owned Maytag property saw an $18,000 valuation increase between 2004 and 2005.
Overall, Maytag’s valuation for taxing purposes for the coming fiscal year now stands at $36.68 million, a 6 percent decline.
What all this means is that Maytag’s valuation has already fallen $2.36 million as city officials prepare to start work on next fiscal year’s budget. At current city tax rates, that means a $38,000 decrease in revenues to city coffers next fiscal year.
And that doesn’t even count the more than $1 million in tax abatement Maytag will receive next year as part of property improvements made at its production facilities, just less than half of the city’s total industrial tax abatement for the coming fiscal year.
County officials said Maytag indicated it would be back again to ask for further valuation reductions.

TIF Funds
In his State of the City address, Mayor Allen noted several economic development projects that will bring new value to the community. Specifically, he noted about $5 million worth of new projects along the city’s western corridor, including the Okoboji Grill, the Newton 66 gas station, Casey’s, Country Kitchen, KFC/Taco Bell and Culver’s. The mayor also noted the new Newton Village project near downtown Newton, valued at $9.5 million, and the $2.75 million expansion at Park Centre.
But the big project he targeted in his address is the new $70 million racetrack development currently under construction on the south edge of town. All told, the new developments carry values of nearly $90 million, about two and half times the value of all 30 Maytag properties combined.
But local residents won’t see any of that value flowing to the bottom line any time soon. And in the case of the racetrack, this year’s kindergartners will be out of college before any of the value flows to the city’s general fund.
This is because all these development projects are in urban renewal zones. By designating these areas as urban renewal sites, the city can issue tax increment financing bonds to pay for infrastructure improvements — such as building new roads or sidewalks or installing special lighting fixtures — to assist the development. In addition, bonds can be used to offer developers economic development grants, as the city has done for several of the recent developments.
Local taxing bodies still receive revenue from the area, but only on the value of the property prior to the development. The taxes paid on any gains in value are earmarked exclusively to pay off the city’s debts on its infrastructure improvements.
Only when those debts are paid and the urban renewal designation is canceled will the gains in tax revenues begin to flow directly into the local governments’ general funds. That can take a long time. The history of the North Central Urban Renewal Area — and the problems potentially in store for the district should Maytag headquarters close — serve as an example.

North Central TIF
In the mid-1980s, the city identified an area in need of revitalization. Stretching from the hospital on the east to the West Eighth Street viaduct on the west, the area was a mish-mash of older homes, some severely decaying, commercial properties well past their prime (the old Churchill Hotel was being used as an apartment rental property) and abandoned buildings.
At the time, state law required cities to designate such areas as blighted to take advantage of urban renewal district provisions. (Since that time, however, state law was changed to allow economic development projects to fall under urban renewal statutes, a course of action aggressively pursued by the city.) The city designated a large area north of the downtown as the North Central Urban Renewal Area with the goal of replacing deteriorated properties with new projects that would strengthen the city and increase the area’s taxable value.
The city went at it full steam. Dozens of properties were purchased (with displaced residents receiving relocation assistance payments) and torn down. City development officials also worked to attract new tenants to the area. Many new projects took over the old landscape — Park Centre, the new library, Peoples Natural Gas and the Eye Care Center, among others.
The effort has been hugely successful. The base value for all the properties in the area when it was designated in 1986 stood at $16.1 million. The base value in the current tax year stands at $55.9 million, nearly a $40 million gain.
Taxes collected above the base year values flow into a TIF account that pays off the bonds the city has used to develop the area. Since its inception, the city has spent nearly $22.6 million — not yet counting the $125,000 that went to The Vernon Company to assist it in renovating a production area following a fire. Today, nearly 20 years later, the city still owes more than $7.6 million.
Payment of that outstanding debt could become a problem in the future should Maytag headquarters close, city officials say. Currently, about $502,000 of Maytag’s total $1.68 million property tax bill goes into the Newton TIF account. In other words, 30 percent of Maytag’s tax bill goes toward paying off the tax increment debt instead of funding the budgets of local taxing units. The remaining $1.1 million in Maytag taxes is divided between the school district, Jasper County and the City of Newton’s general fund. Newton’s general fund receives approximately $438,000 this tax year.
Schornack, the city’s administrator, says that if the Maytag headquarters is closed, the city may have difficulty financing the debt obligations that remain in the North Central TIF district and could force the city to expand the timeframe for paying off those obligations. The remaining values in North Central Urban Renewal Area may not be sufficient to finance the current debt schedule, he said.
“(Maytag leaving) could hammer that TIF fund to the point that we may not have enough to pay our debt obligations,” he said. “We may have to renegotiate some refinancing.”

Residential valuations
When the mayor gave his State of the City address early this year, he noted the continued growth rate of residential property values. Home values rose 2.3 percent, from $528 million in 2004 to $540.6 million this year.
“It’s not as gloom and doom as everyone says,” the mayor said back in March, well before Maytag’s announced sale. “Property values are remaining pretty consistent. Two percent is not a huge growth rate, but it’s consistent.”
On the surface, Newton’s $12.6 million gain in residential property values appears to be a good thing, resulting in more tax revenue. But in reality, the city will see lower gross taxable residential values to fund its budget early next year.
Two factors are causing the decline. The first is tax abatement.
While the city saw a 2.3 percent increase in residential assessed values for the year, it also saw a 14 percent increase in the value of residential abatements included in its assessments. The 2005 residential assessments include $10.5 million worth of abatement value. In 2004, the residential abatement stood at $9.2 million. For the two years, the actual values of residential properties stood at $518.8 million in 2004 compared to $530.1 million this year, a $11.3 million increase.
But the bigger culprit is the residential rollback. Each year, the Iowa Department of Revenue sets the percentage of a residential property’s total assessed value eligible for taxation. For example, if the rollback was set at 50 percent, a home with a $100,000 assessed value would have a $50,000 taxable value.
Five years ago, the rollback was 56.26 percent. Last year, the rate was set at 47.96 percent. Next year, according to preliminary state figures, the rollback will fall to 46.18 percent. The final rollback figure will be set Nov. 1.
Should that preliminary rollback figure stand, and local assessor officials feel it will, it will contribute to a $4 million net reduction in the gross taxable valuation of residential properties within the city next year. That figure does not include the homestead and military tax credits available to homeowners.

Commercial values
Commercial values in Newton saw a 3.5 percent increase from 2004 to 2005, bringing the value up more than $4.6 million to $135.4 million this year. However, the $10.5 million in tax abatements given to commercial properties needs to be backed out from the total, bringing the net commercial assessments in the city to $124.8 million. But, as was seen earlier, much of this new commercial value sits in tax increment financing districts. Much of the new value is earmarked solely for the repayment of city debt associated with the districts and does not flow to the city’s general fund.
To compound matters for the city, state revenue officials have indicated commercial properties will likely receive a rollback this year. A preliminary rollback figure of 98.95 percent has been issued, which will bring down the assessed value of commercial properties in Newton to $123.5 million this year. That, however, is still an increase over last year’s commercial value of $119.5 million, which takes into account the $11.1 million worth of abatement given to commercial properties in Newton in 2004.

Industrial values
Industrial values in Newton also took a hit this year, nearly all of it from Maytag. For 2005, industrial values dropped $2.42 million, 98 percent of which is accounted for by the $2.36 million reduction in Maytag values. Industrial values in 2004 stood at $46.6 million, which included $2.38 million worth of industrial abatement. This year the valuation fell to $44.2 million, which includes $2.24 million worth of abatement. There is no rollback planned for industrial properties.
For all classes of properties combined — and taking into account new values, rollbacks and tax abatement — the city will have $2.3 million less in gross taxable values in 2005 than in 2004. In addition, M&E taxes are gone for good and much of the new values the city has seen are tied to TIF accounts untouchable for general fund purposes. Finally, the city’s general fund tax levy is at its $8.10 maximum rate, leaving little wiggle room in finding ways to fund city services.

We need to face our challenges

October 5, 2005
We need to face our challenges
Date October 05, 2005
Section(s) Columnists
Newton Daily News Editorial  
Newton has long benefitted from its relationship with Maytag. The company founded in Newton 112 years ago has supplied generations with stable employment, provided a tax base to enable the city to provide first-rate services and been a generous contributor to the development of the physical assets that sets this community apart.

But Maytag‘s future in Newton is now up in the air. No one knows — or is saying — what its future might hold.

Some indicators, as previous stories in this newspaper’s continuing series have pointed out, say that maybe it won’t be so bad should Maytag leave or pare its presence down. The community has appeared to weather the first onslaught of Maytag job reductions fairly well. Residential property values are up and the market remains strong. U.S. Census Bureau population estimates — as can be verified by the first growth in school enrollment levels in the past seven years — are on the upswing in Newton and countywide. And those who have lost jobs appear to have found new ones, largely due to Newton’s easy access to the Des Moines metro area’s strong economy and job opportunity base.

But, we fear, these indicators may only be offering false hope. The reality of Newton’s current plight may be much more severe.

As the news articles today and Tuesday show, the City of Newton is close to rope’s end when it comes to its ability to provide basic city services to its residents. The city has already lost nearly $32 million in taxable value due to decisions made 10 years ago — probably rightly so — to keep Maytag in Newton. Growth tactics initiated by the city — including urban renewal, tax increment financing and tax abatement — have proven to be hugely successful over the years but have stymied the flow of tax dollars to the bottom line. State-set percentages of how much local governments can tax on the value of residential property have fallen so low that Newton’s $12 million valuation increase this year actually results in a $4 million loss.

And all this is while Maytag is still here. Pull Maytag out, including its $1.68 million property tax payment, and the future becomes much less secure.

We are at a crucial juncture in our history. Changes loom ahead. Maytag‘s likely departure or lessened presence would have a huge impact on the health of this community. We cannot escape that fact.

But we must also realize that we can have a say in our community’s future path. It is up to the residents of Newton and Jasper County to forge a successful future, regardless of Maytag‘s course.

First, we need to assess the risks we face.

Next, we need to identify the assets and resources we do possess that can help us grow. Further, we need to understand what specific growth opportunities and strategies have the most potential for us.

Finally, we need to take steps now to pursue those possibilities.

That effort, however, won’t be easy. But it’s a challenge we must face.

Water rates may be headed up

October 4, 2005
Water rates may be headed up
Date October 04, 2005
Section(s) Local News


Newton WaterWorks Director LD Palmer travels to the city’s pumping station south of town and sees that flow rates aren’t what they once were. He sees the results, too — this year’s revenues are not meeting operating costs.

It’s easy to pinpoint why. Maytag has been using a lot less water, especially over the last two years. If current trends continue, Palmer says Maytag‘s water bills will be only 48 percent of what the city expected — $253,069 compared to $524,503. And if Maytag were to drop out of the picture entirely, Palmer said it could take a 30 percent rate increase to cover the water plant’s operating costs.

“With the uncertainty of Maytag‘s future, it may be a greater burden for the rest of the rate payers,” Palmer said.

For years and years, Maytag was the Newton water system’s largest customer. But less washing machine production means less water usage at its Newton plant. At its peak in the 1980s and ’90s, Maytag used an average of about 1.2 million gallons a day. The company was a steady and reliable customer, paying about a half million dollars in water bills each year.

But starting in 2000, Palmer noticed a blip in Maytag water usage. About 100,000 gallons less water a day was pumped from the South Skunk Alluvial Aquifer to meet Maytag‘s needs. It fell another 200,000 gallons a day the next year and then leveled out until 2003. The last two years, however, Maytag‘s usage has tumbled again.

Today, Maytag uses about 600,000 gallons of Newton water each day, half of what it used just five years ago. What’s frustrating to Palmer is that his department didn’t see the Maytag reductions coming. In November 2000, the WaterWorks completed a cost of service study that adjusted rates so revenues from its industrial, residential and commercial classes, plus sales to Central Iowa Water Association, would be as close as possible to the actual costs of serving each class. Rate hikes were implemented over a three-year period to bring costs and revenues in line.

Even so, Palmer says Newton’s water rates are low compared to other communities. For local industrial users, 100,000 cubic feet (748,000 gallons) of water costs about $902. In Altoona, it would cost $2,405; in Ankeny, $1,754. Residential rates also compare favorably, Palmer said. In Newton, 800 cubic feet (6,000 gallons) would cost a user $13.60. An Altoona resident would pay $24.20; in Ankeny $16.24.

But Maytag‘s reduced usage may force those rates up. If the WaterWorks forecast proves correct — that Maytag bills will only reach 48 percent of expected levels — the WaterWorks will face a $271,000 shortfall in revenues for the year.

How will that shortfall be made up? Palmer doesn’t know yet. A number of factors need to be considered, he said, including the Newton Speedway’s new usage, potential added sales to rural water and the up or down impacts from current or future water users. But, he warned, calculations show that if Maytag dried up completely as a current water user and other usage remains the same, changes to the current rates are assured.

“The people that are left are going to have to pick up the tab,” he said.

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


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


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.