For decades, the Rock River Valley relied on the manufacturing sector to drive a healthy and powerful economy. And while it is still the primary driver of the local economy — and offers bright glimmers of hope for the future, even amid the economic downturn — the gargantuan plants of 30 years ago have disappeared. Small manufacturers have taken over as their larger brethren close, move or are acquired, and service sector businesses like health care have replaced them as the region’s large employers.
In 1980, as Ronald Reagan took over the White House, the great manufacturing landmarks of the Rock River Valley dominated an economy that was in the early stages of its most difficult recession in 50 years.
Nearly 37 percent of 145,000 people on the job in Boone and Winnebago counties worked in manufacturing, according to U.S. Bureau of Economic Analysis statistics.
And many of them worked for the area’s biggest names: 12 of the top 20 employers were manufacturing firms, including National Lock, Atwood Industries and Elco Tool. Those 12 employed more than 27,000 people.
In 2009, another president with Illinois ties — Barack Obama is from Chicago; Reagan was born in Tampico and grew up in Dixon — will move into the White House faced with an economic meltdown that may rival or even surpass the downturn of the 1980s.
Manufacturing remains the backbone of the Rock River Valley economy, but the region’s big manufacturing corporations have either closed, moved or been acquired. And today’s business landscape looks significantly different then it did nearly 30 years ago — even if the region’s economy is still largely driven by manufacturing.
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The recession of the early 1980s — when soup kitchens arose in vacant storefronts; thousands of people waited in lines for government handouts of cheese, butter and dry milk; and Rockford’s unemployment rate peaked at 24.8 percent, the highest in the nation — hit the Rock River Valley hard.
Families moved in droves to find work. The Harlem School District and others, faced with rapidly declining enrollments, closed and sold off school buildings. Today, Loves Park City Hall is in the former Marshall Middle School, a financial decision made in tough times that the district wishes it had back.
But as damaging as the early part of the decade was, the region’s economy recovered.
“I would argue, even as difficult as the early 1980s was for Rockford, the industrial base didn’t really change,” said John Lewis, an economist for Northern Illinois University. “The Quad Cities was hit even harder and forced to restructure. Manufacturing didn’t slow down in Peoria. It just left, and Peoria went heavy into biomedical. In Rockford, a lot of companies just muddled through.”
Indeed, although the downturn in the 1980s lingered in Rockford after the nation’s recovery began, by 1988 the area’s per-capita personal income, which includes salary, investments and rental income, was greater in Boone and Winnebago counties than in the nation. The Rock River Valley’s earning power topped the nation again in 1994, but it has fallen behind in 11 of the past 13 years.
Keith Irons has seen the evolution.
In 1980, he was a corporate officer for Barber-Colman, which employed about 3,300 people in eight divisions. In 1981, the company broke ground on a $6.4 million headquarters in Cherry Valley; by 1984, it started to sell off divisions. The entire operation was acquired by an British company in a $227.5 million deal.
Today, Barber-Colman lives on as several smaller companies, such as Gleason Cutting Tools, GE Aviation, TAC LLC and Invensys Eurotherm.
Irons, who went on to serve as president and CEO of Oregon-based E.D. Etnyre and an equipment distributorship, said it wasn’t the 1980s recession that altered Barber-Colman. It was an economic model.
“Consolidation took over as the chief model of commerce and industry,” he said. “Companies like Wal-Mart and Lowe’s changed the face of industry.”
In 1995, Textron Inc. acquired Elco Tool and created Textron Fastening Systems, but the Rhode Island conglomerate sold off its fastening interests by 2006.
Newell Co. acquired Amerock Corp. in 1987, and the company rapidly grew into Newell Rubbermaid. For decades it was based in Freeport, but the company announced in 2003 that it was moving its corporate headquarters to Atlanta. In 2004, it moved manufacturing overseas and most of its office functions to Freeport. Now the company has a small contingent of design engineers in a 500,000-square-foot plant on Auburn Street.
In the meantime, service-sector jobs in health care, distribution and government have filled the void. The top 20 employers in the area in 2005 included UPS, the world’s largest shipping company, and pharmaceutical packaging company Anderson Packaging. The area’s three largest health systems employed more than 7,000 people, and six taxing bodies were in the top 20: three school districts, Winnebago County, the city of Rockford and the Rockford Park District.
Lewis said the diversification, in some cases, is good for the area.
“Logistics and warehousing is going to continue to be an area of growth because of the major interstates and the Rockford airport,” he said.
But the growing importance of public-sector employment is not as positive: “The problem with public sector growth is that you pay for it with taxes.”
For much of 2008, the major difficulties were in areas where the housing market was hottest — the East and West coasts and the Southwest.
But the pain has hit the Rock River Valley as well. October’s 9.7 percent unemployment rate was the highest for any month since 1992. In November, it rose to 10.4 percent. Since Oct. 1, at least 15 companies have announced job cuts.
But underneath the headlines, Irons sees hope. Indeed, several developments this year point to better times — again powered by the manufacturing industry:
Acument Global Technologies chose Rockford for its Camcar Aerospace production center and headquarters.
Danfoss Drives broke ground on a $32 million expansion of its Loves Park plant.
Rockford Automated Machining, a newly formed company, won a contract to make brake drums in Rockford, work that was being done in China.
Woodward Governor is spending $50 million to expand and renovate its landmark Loves Park plant.
B/E Aerospace, based in the EIGERlab, is developing new vacuum waste systems for airplanes.
Irons, who chairs the board of Rockford Area Ventures Inc., which oversees EIGERlab, said a new cycle of companies are creating a new economic model.
“The counter to the consolidation is service, responsiveness,” he said. “Value-added manufacturing. Service you can’t get from a consolidator. Entrepreneurship is back.”
Lewis said stronger economic underpinnings should emerge.
“There were some companies using obsolete production techniques and others making goods that were no longer feasible to make here,” he said. “Those companies mostly are gone, and what we are seeing now is growth in companies tied to aerospace and other high-technology sectors that have a very positive growth future.”
Alex Gary can be reached at email@example.com or (815) 987-1339.