Posted on Fri, Jan. 06, 2012
last updated: January 06, 2012 05:35:47 PM
WASHINGTON — Wichita, Kan., prides itself as the Air Capital for the multitude of aircraft manufacturers that call it home, but after this week, it will have to contemplate a future without Boeing, the signature company of the city's signature industry.
Wichita's situation rings familiar for cities across the country that have lost thousands of high-paying jobs amid a recession that's changed the way they define themselves to the world.
Charlotte, N.C., was known as "Banktown" for its dominant business until the 2008 financial crisis threw that status into jeopardy. Fremont, Calif., assembled cars for Toyota and General Motors for a quarter century, but when a large auto plant closed amid industry turmoil in 2010, it created a ripple effect across the regional and state economy.
"Most of the urban areas of the country are still struggling. We are," said Tony Plath, a finance professor at the University of North Carolina at Charlotte. "There's no place to hide from this economy."
Many Wichita leaders would like another aircraft manufacturer to fill the void, given the suitability of the 2-million-square-foot Boeing site and the skillset of its 2,100 workers.
"We have other companies with needs for a workforce similar to what Boeing has," said Gary Plummer, the president of the Wichita Chamber of Commerce. "There's a good possibility that talent could be absorbed by other companies."
But another potential answer for Wichita is energy, a solution that both Charlotte and Fremont have embraced. And Kansas has one form of energy in abundance: wind.
"It's in the broader national interest to address energy issues, and to create employment," said Harley Shaiken, a professor at the University of California at Berkeley who advises policymakers on trade and labor issues. "The ripples of this are quite significant."
The wind energy industry has grown in Kansas in recent years, driven by a desire for energy independence and environmental protection. It has the support of Republican Gov. Sam Brownback.
"We, as a nation, have been waiting for the moment when a true balance between environmental concerns, economic benefits and energy needs is in view," Brownback wrote in an op-ed in the Wichita Eagle in September. "I believe that moment has arrived."
In October, BP revealed plans to build the state's largest wind farm, an $800 million, 419-megawatt operation that will stretch across four counties.
Wind turbines are made of the same composite materials as aircraft, and the skillsets needed to manufacture them are very similar. "That's one of the targeted industries for south-central Kansas," Plummer said.
Charlotte and Fremont might offer some lessons for a post-Boeing Wichita.
After the 2008 financial crisis nearly took down the banking sector, Charlotte watched one of its hometown banking companies, Wachovia, get swallowed up by San Francisco-based Wells Fargo. Another Charlotte-based company, Bank of America, has struggled with its large exposure to subprime mortgages, and the company is cutting tens of thousands of jobs.
Now, in a fittingly symbolic sign of the change, a gleaming 48-story skyscraper that Wachovia built for itself in Charlotte now is the home of Duke Energy, one of the nation's largest electric utilities.
While Duke may be a traditional energy company, it owns solar and wind projects, including two wind farms in Kansas. And it's surrounded in Charlotte by other companies, such as Siemens and General Electric, that are on the cutting edge of advanced energy technologies, including solar, wind and nuclear.
About 2,500 miles away, on the east side of San Francisco Bay, Fremont's largest employer for a quarter century was NUMMI — New United Motor Manufacturing, a joint operation between General Motors and Toyota that assembled cars and trucks for both companies.
But when GM entered bankruptcy and Toyota faced product recalls and depressed auto sales, they ended their Fremont partnership, closing the last auto assembly plant on the West Coast. Suddenly, almost 5,000 well-paid employees were out of work, and the plant's closure affected thousands more supporting jobs in the region. It couldn't have come at a worse time for California, struggling with high unemployment and a real-estate collapse.
"You have to find the lemonade in the lemons, I guess, but that's not always easy to do," said Nina Moore, the director of government and community affairs for the Fremont Chamber of Commerce.
Two years later, NUMMI will produce cars again — but not Corollas or Tacomas. By mid-2012, it will build luxury electric vehicles for Tesla, a startup founded in 2003 by a group of engineers in Silicon Valley. Although the plant employs less than 500 now, a fraction of what it did under Toyota and GM, it could add more workers if the cars are successful.
"We're working hard to make sure we have a diversified energy base," Moore said. "We think that's a great direction to go in."
But Fremont's transition also illustrates what can go wrong. In August, Solyndra, a solar energy company based in Fremont, went bankrupt, and 1,100 people were laid off. It dealt a big setback to the Obama administration's efforts to promote renewable energy: The Energy Department had backed Solyndra with a $535 million loan guarantee.
While Shaiken thinks more scrutiny should have been applied to Solyndra's business plan, he said the notion of government supporting new technology isn't a bad one if it helps create new jobs.
"You can't minimize risk, but all of the great economic successes tend to have that risk," Shaiken said.
Janet Twomey, an engineering professor at Wichita State University, said more wind energy jobs won't come to Wichita without support from the state. Despite the similarity in materials and manufacturing between aircraft parts and wind turbines, she said, aircraft manufacturers have been reluctant to get into the business because turbines are not as profitable.
"They don't want to commit themselves to the state unless the state is committed to them," Twomey said. "There are lots of opportunities, but is the state willing to put more money into it?"
Also, new industries may not create enough jobs to replace what was lost, and they often don't pay as well. That's true for the laid-off workers in Fremont, Shaiken said.
"Many of them have yet to be re-employed," he said. "Many of those who have found new jobs, it's been at significantly lower pay scales."
It's also true in Charlotte, Plath said, because the banking jobs paid very well, and the city is having to adjust to the lower incomes of the new positions in the energy sector.
"The quality of the jobs you lose is almost always greater than what you gain," he said. "An electrical engineer or nuclear engineer makes a good salary, but not as good as an investment banker."
Whatever the future holds for Wichita, Plummer said that Boeing's departure won't diminish the role of aviation in the city. The industry still employs 25,000 workers in the area at other companies, including Bombardier Learjet, Hawker Beechcraft and Cessna.
But Plummer said the city will "leave no stone unturned" to fill Boeing's void.
"This is a setback, but we'll bounce back," he said.
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