Albert Lea: The manufacturing meltdown

Bob Larson
Bob Larson has worked at the Lou Rich plant in Albert Lea for 25 years. His schedule was cut back earlier this year to 32 hours per week, and said many employees were afraid they were going to lose their jobs. Business is picking up now, and "it gives you hope," said Larson.
MPR Photo/Elizabeth Baier

In Albert Lea, the pain of the manufacturing slump is acute. The state's important manufacturing sector has lost nearly 43,000 jobs since the start of the recession -- more than any other major industry.

With a heavy reliance on factory jobs, Albert Lea's jobless rate reached 11.1 percent earlier this year. That was the highest it's been for this town in at least a decade. But unlike other hard-hit parts of the state, Albert Lea has no single, signature business that got hammered.

"You think of northern Minnesota, you think of mining, you think of timber, things that have been very directly impacted by the type of recession that we've had," said Jennifer Ridgeway, a state labor market analyst.

Ridgeway says even though Albert Lea has no dominant employer, the area relies heavily on factory jobs, which did get hammered.

"Manufacturing is the industry that's been the hardest hit in terms of job loss. But it's more likely to be 20 people at a lot of different firms, rather than 100 people at one firm," she said.

Lou Rich is one of those firms. The company, which has two factories in Albert Lea, supplies parts for a diverse range of products -- everything from X-ray machines to lawn mowers.

The business grew until 2008. But earlier this year, customers began slashing orders, and machinist Bob Larson says the change was obvious.

Empty warehouse
In 2008, one out of every five jobs in Albert Lea was is in manufacturing. The state average was one in eight. This is one of several empty warehouses in the one of the city's industrial parks.
MPR Photo/Elizabeth Baier

"Everybody was scared they were going to lose their job. A lot of people were wondering if they did get laid off, would they be back," said Larson.

The company scaled back, eliminated one of its three shifts, and laid off 60 people -- one-fifth of the staff. Workers who remained, like Bob Larson, had their hours cut.

The pattern repeated across a wide swath of factories in the area, helping to drive up Albert Lea's jobless rate.

In some ways, Albert Lea's current troubles stem from the town's success at building a more diverse manufacturing economy.

For decades, Albert Lea was a one-company town, and its prosperity was tied to the meatpacking industry.

Dan Dorman, the city's economic development director, says that to understand the city's current slump, it's important to understand its recent past.

Business park
One of the industrial parks in the city of Albert Lea. The city's economic base is comprised of about 50 small to mid-sized manufacturers, including some in this park like Albert Lea Select Foods, Minnesota Corrugated Box, and Lou Rich.
MPR Photo/Elizabeth Baier

Right in the center of town sits a huge empty lot, the former site of what was the Wilson packing house -- which used to be the center of the city's economy.

The plant was there for years, even while it changed hands several times. In 2001, it burned down.

Farmland Foods, the plant's owner at the time, decided not to rebuild after the fire, and the city lost 500 relatively well-paying jobs.

Dorman says that was part of the reason city leaders launched a program to attract other manufacturers.

"They understood we were overly dependent on one industry without local ownership," said Dorman. "Without local ownership, or even if you have local ownership, being that dependent on one industry is always difficult."

Farmland Foods in ruins
This 2003 file photo shows the Farmland Foods plant in Albert Lea, which burned down in 2001 but wasn't demolished for more than two years. The plant was one of the city's largest employers, and the fire put 500 people out of work.
MPR file photo/Erin Galbally

The city launched a program to offer business owners loans and tax benefits, and built several industrial buildings so companies only had to move in.

In eight years, Albert Lea has attracted an array of small to mid-sized manufacturers, including Rainbow Play Systems, a playground equipment maker, and Larson, a storm door manufacturer.

But the city's success left it more vulnerable to the meltdown in manufacturing.

As officials were trying to attract new manufacturers to Albert Lea, many local workers began to travel outside the city for jobs.

Albert Lea sits at the intersection of two major highways, which makes it easy for residents to commute to factories in Owatonna or Lake Mills, Iowa. The fortunes of those areas can affect the jobless rate in Albert Lea.

Site of Farmland plant
The lot where the city's once largest employer, Farmland Foods, was located before it burned down in 2001. The fire meant 500 jobs were lost and the city's unemployment rate shot up to 7.6 percent compared to the state rate of 3.6 percent.
MPR Photo/Elizabeth Baier

Camille Lynn, 45, commuted for a year and a half to the small town of Manchester, where she worked for a company that printed tractor manuals.

In February, Lynn was laid off, like a lot of Albert Lea's commuters.

"Once in a while, when you think about it, you go, Oh my God, now we're going into winter again, so our heating bills are going to go up. We don't have the income," she said.

Lynn's layoff has put her on edge. Her husband works a seasonal job pouring concrete, and he'll be laid off in a few weeks, too.

Lynn says she's applied for 75 jobs since February. But work is scarce and she's still waiting for an offer.

So she sometimes visits the local Workforce Center to look through job listings posted on the Center's online job bank. She finds listings for sales jobs, retail and assembly-line work. Some are only temporary.

Albert Lea-based Lou Rich makes metal parts for a variety of products, including John Deere combines.
MPR Photo/Elizabeth Baier

Lynn says if she can't find work soon, she'll move away, even if it means being far from her children, who live in the area.

"I won't starve. I will not starve, and neither will my husband. So we'll do whatever we have to do to get through it," she said.

Even as people like Camille Lynn struggle to find work again, there are signs of a budding recovery in Albert Lea's manufacturing sector.

At the Lou Rich plant, company president Mike Larson walks around his massive facility. This is one of the companies that added manufacturing jobs in the area, with an expansion in 2006.

Larson says the business started to hurt when many of his customers began buying less to shrink their own inventories.

"We've kind of seen that [for] probably close to six months," said Larson. "Now we think a lot of our customers' inventory levels are at a low level, and so at least they're ordering based on their demand, so at least it's stabilized that way for us."

And that's given Larson the confidence to to bring back some workers. He's rehird six employees, and most full-timers are back to clocking 40 hours a week.

For machinist Bob Larson (no relation to Mike Larson), that's been a huge relief.

"It just gives you hope. And it gives you some extra income and you can get your checking account bumped back up, and you feel like you're getting ahead instead of going backwards," he said.

Despite last week's report suggesting the recession is over, Lou Rich President Mike Larson is still in a wait-and-see mode.

"Is that true market demand out there, or is it more demand from the stimulus package that is just temporary? That's what's concerning to a manufacturer like us," said Larson.

The changes at Lou Rich are fairly typical, according to Jennifer Ridgeway, the labor market analyst. She predicts a slow and steady recovery for the region. She says for the most part, workers and manufacturers are optimistic things will improve.

"The recovery is starting to take hold, but it will take a tremendous amount of time before we see a real impact on jobs," said Ridgeway. "There are a lot of unemployed people out there. Employers will be somewhat slow to add back jobs."

Albert Lea's unemployment rate has come down a bit from its peak. But it's still more than 9 percent, well above normal for this time of year.

Manufacturers are not likely to boost production without a strong signal from customers. And until then, workers in Albert Lea will continue to face stiff competition for the few jobs that are starting to open up.