Closure could create economic chain reaction

Macon business leaders say the possible loss of 2,100 jobs from the Brown & Williamson closure could create a ripple effect that touches many industries.

Though some said they'd heard rumors of a merger or possible closure for months, most described the news that the Macon plant could close as devastating.

"We're in shock right now. Macon's got to attract more businesses. We've got to grow like other areas are growing," said Terry Tiller, general sales manager at Riverside Ford.

Tiller said Macon's leaders need to focus on issues such as the Fall Line Freeway and commuter rail to win more business to the area. He said B&W employees have been good customers at the dealership.

"We sell 300 cars a month. Probably 10 to 15 cars a month, minimum, are to Brown & Williamson employees. They buy a lot of cars," Tiller said.

Local convenience stores and sandwich stops said the closing would have a large impact on their business. Kendra Sanders, an employee at a nearby Subway on Ocmulgee East Boulevard, said Monday night that about half of the shop's lunchtime customers work at Brown & Williamson.

"She told us to be considerate and understanding of their feelings," Sanders said.

The impact on the tax rolls and utilities is equally huge. Brown & Williamson is Bibb County's largest taxpayer and perhaps the biggest customer of the Macon Water Authority, said Tax Commissioner Jim Davis and Tony Rojas, executive director of MWA.

The closing could easily lead to an increase in water rates, considering that Brown & Williamson paid about $2 million a year in water and sewer bills - about 7 percent of the $29 million in water and sewer revenue the authority collects each year, said Rojas, who was working from home with approximate numbers.

What's more, the company paid about 5 percent of county's total property taxes. That's more than $5 million out of the roughly $102 million collected each year to fund schools and the county government. That amounts to almost a mill and a half on the tax rate, but not all tax revenue from the Brown & Williamson plant would be lost, even if the plant shuts down and all the equipment is moved out. Someone will still be paying on the land, Davis said.

"We're not gonna go out there and put a bomb to the place," Davis said. "The building and the land will still be there."

Losing taxes on the equipment will be a significant loss, though, said Davis, who plans to analyze this effect today.

Randy England, human resources director for neighboring company Geico, said the news put him at a loss for words. Geico is the county's second-largest employer with more than 3,800 employees.

"A lot of our employees have spouses that work there. That's a lot of two-income families that will be losing one of those incomes. Their average salary is a lot higher than ours," England said.

Kathy Smith, director of marketing for Colonial Mall Macon, said it would be hard to estimate the economic impact of those jobs leaving. She said the real estate market would be affected if a large number of workers have to move.

"It'll affect a lot of area industries like housing, but it's very hard to speculate about that," Smith said. "That's a lot of people out of a job, but at least they have some warning."

Smith said the impact would be felt not just by the employees in Macon but by their families across Middle Georgia.

"It's a shock and it's a shame because they have been one of the area's largest employers for years," Smith said.

Brown & Williamson employees used the same word over and over Monday night: "devastating."

Some blamed the possible closing of their Macon plant on state officials, who raised the tobacco tax earlier this year from 12 cents a pack to 37 cents a pack. Others said a lack of local support forced company officials to look elsewhere.

"When prices go up and consumption goes down, what can you expect?" asked Randy Crawford, who has worked at B&W almost 25 years. "It costs more for them to operate here. That's why we fought to keep the taxes down. ... Now, this is what we get."

Said 16-year B&W technician Gus Mackey: "A company just can't keep giving up every penny they make. We've got a governor here that keeps putting the pressure on tobacco companies, and North Carolina has a tobacco-friendly governor. (Gov. Sonny) Perdue kept saying he's our neighbor and he's our friend, but the first somebody he jumped on was the tobacco industry."

Brown & Williamson officials announced Monday they plan to form a new company - Reynolds American Inc. - with R.J. Reynolds Tobacco and move U.S. operations to Winston-Salem, N.C. The merger will make them the second-largest tobacco company in the country, B&W officials said.

Crawford, who works with two of his brothers, has tried to help keep the Macon plant open. He found out about the merger from his twin brother, but said he had heard rumors about it earlier in the day.

"I knew something was going to happen, but I didn't think it would happen this soon," said Crawford, 48.

"(The tax) cost more than I thought it would," Crawford said. "They're not going to say it had anything to do with it, but this didn't happen until the tax went up."

Shawn Lasker, an electronics technician at B&W since 1995, said he'd also heard the rumors the company would close its doors, but nothing was ever etched in stone. Now, Lasker, vice president of one of the company's unions, says the signs were there all along.

"You always hear whispers about things like this, but you never get anything official until it finally happens," said Lasker, vice president of the Local 362-T, Bakery, Confectionery, Tobacco and Grain Millers International Union.

"You look at something like R.J Reynolds - their stock jumped $12 during the past two quarters because of speculation, so you know anything is possible," he said.

Lasker said that under union contract, B&W is required to provide an 18-month notice before closing the factory, "so the company will remain a viable employer here," at least for that period.

He said the majority of the local work force is near retirement or within two years of retirement. He said he expects the company to offer incentive packages to entice many toward early retirement.

"Reynolds just laid off 40 percent (2,400 people) of its company just two months ago, so they're already overstocked," Lasker said.

Some employees, such as Crawford, say they are eligible for early retirement and could move to North Carolina "to finish my time with the company."

"I started at B&W with the idea of staying here until retirement," Crawford said. "When I came here, it was a great place to work. Business was booming, and we were working overtime. ... Now, this happens years later."

Other employees, still reeling from the news that they could be out of a job, say there are many questions that still need answering.

"Right now, I'm devastated and in a state of shock like I'm sure a lot of my comrades are," said City Councilman Charles Dudley, who has been with the company 19 years. "We're talking about our families and our futures. Just like a lot of other people, I'm curious about what the future holds at Brown & Williamson."

Dudley said many of the employees who are in their early 50s and not ready for retirement will find it difficult to compete in a job market that typically goes after younger employees.

Since B&W spends about $50 million in purchasing, taxes and expenditures, Lasker also called the possible move "devastating economically" for the state.

For example, B&W bought out American Tobacco in Reidsville, N.C., eight years ago, but because the two companies had overlapping products, the Federal Trade Commission said the newly merged company controlled too much of the market, so they sold several brands.

From there, a new company - Commonwealth Tobacco - opened at the facility and many of the former American Tobacco employees were rehired, Lasker said.

Tim Galoppa planned to retire at B&W in Macon, but his hopes were dashed when he learned of the plant closing.

"I'm just devastated," Galoppa, 40, said. "We knew something was going to happen, but I never thought it would be anything like this. I thought we'd just ride it out."

"It's a slap in the face," he said. "We've done a lot of things to try to help B&W, but I guess it was a little too late."

I posted other thoughts as a one-time contractor there and what their closing would do to Macon on another thread.

These articles reinforce my 1990 opinion that Macon, as big as it was, was basically a one-industry town.

I left California in '88 to start a new career as a contract programmer in Savannah, GA. After six months I went to B&W in Macon.

Being used to California, the Georgia house prices stunned me -- an 1800 sq. ft home for $85K in a gated Gucci community. Hell, I thought, let's buy two!

Five years later my gig there was up -- and the house was still worth only $85K. Took me a year to sell it.

If the housing market is still as slow there now, you won't be able to give those houses away.

Oh yeah, I forgot to mention this:

There's the hidden cost of factories going overseas. I saw this happen when a Georgia canning plant moved to Mexico in the early 90s. The people who were laid off were cutting lawns trying to stay afloat when their property taxes shot up to make up for the factory's loss. Most of them had to sell out.

That amounts to almost a mill and a half on the tax rate, but not all tax revenue from the Brown & Williamson plant would be lost, even if the plant shuts down and all the equipment is moved out. Someone will still be paying on the land, Davis said."

He's whistling past the graveyard. As I toured the country as a contract programmer, I saw bare land where factories once stood. The owners razed them so they'd be taxed at the cheaper unimproved rate.

This is exactly why I ask free-traitors what they are actually in favor of conserving, since they say they are the true conservatives. All I see is a mystical promise of improved efficiency and lower costs, along with the very real scenario of people spending their whole lives moving and retraining as jobs are destroyed left and right. Even if the promises of free trade were real, I would still have a problem with this system. How is anyone ever going to be able to settle down, buy a house, raise a family? This is conservatism? Looks like suicide of the west to me.

So rather than downsizing local government in response to the lowered tax revenues, they kept the size of the local government the same and raised the taxes on the citizens to make up for the shortfall?

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