In the span of two years, Newton, Iowa, has reinvented itself after the loss of Maytag’s corporate and manufacturing headquarters.  As a result, it has received national attention and serves as a textbook example of how small and rural communities can survive even the most devastating job loss.

Watch the video here.

EMSI contributed to the project and is very pleased to hear about the town’s success. We prepared a case study, which you can read here.

Summary: Nearly 1,900 workers in the small community lost their jobs once Whirlpool, which acquired Maytag in 2006, closed the facility. After being awarded the U.S. Department of Labor’s first-ever Regional Innovation Grant, regional leaders contracted with EMSI and consulting firm Maher & Maher to come up with a revitalization plan.

Thus far, the results have been very promising. The small community recruited new industries (specifically wind energy firms) to make up for the loss of the giant appliance manufacturer. Currently, about 1,200 jobs have been reclaimed through the addition of a handful of new companies to the area.

This week the Washington Post published an article reinforcing the critical role that community colleges play as an ideal avenue for job retraining. With unemployment at a 14-year high, enrollment at two-year colleges has increased 8 percent this fall, according to one group’s estimate cited in the piece.

While the United States has one of the highest proportions of young adults enrolled in college, it lags behind a dozen or so rivals in the proportion who complete a degree.

The new philanthropic attention was underscored last week when the giant Bill and Melinda Gates Foundation announced it would spend up to half a billion dollars over the next four years on a college completion initiative.

The goal is doubling the current proportion of about 25 percent of low-income people who earn a postsecondary credential. And it was notable that officials said the initial focus would be on two-year schools.

“More young people are enrolled in college this year than ever before,” Melinda Gates said at the Seattle conference where the initiative was announced. “But the payoff doesn’t come with enrolling in college; the payoff comes when a student gets a postsecondary degree that helps them get a job with a family wage.”

If you’re working at a community college and you’re wondering what your region’s largest training needs are, give EMSI a call.

For more than a century, the economy of Newton, Iowa, has depended on the presence of Maytag. But when the manufacturer was swallowed up by Whirlpool, which promptly closed the Newton plant, regional leaders had to develop a new revitalization and economic development strategy from scratch. The result has been the creation of 1,200 new jobs in Newton alone and a textbook example for other regions dealing with similar circumstances.

Read the full case study here (PDF): Newton Case Study

Situation

In 2006, when Whirlpool decided to move out of Newton, Iowa, the small town was faced with losing its largest employer and the backbone of its economy. The last round of layoffs, which included the shuttering of Maytag’s longtime corporate headquarters, amounted to nearly 1,900 workers in the town of only 16,000 people. And it followed the loss of 2,000 jobs in the region over the previous five-year period.  But by the time it was sold and shut down, local leaders had begun creating partnerships and strategies to help Newton and the surrounding region rebound. With the help of more than $1 million from the U.S. Department of Labor, including the first-ever Regional Innovation Grant (RIG), a revitalization plan was crafted. And it quickly started paying dividends—thanks to a strong network of decision-makers and a foundation of regional economic intelligence.

Challenges

Once Newton was awarded the RIG, the partners of the Newton Transformation Council contracted with two specialized firms, Maher & Maher and Economic Modeling Specialists, Inc. (EMSI), to sketch out a revitalization plan.
In addition to modeling the total impact of the closure and running transition-worker scenarios, the EMSI consulting team was charged with

1)    Defining the real economic boundaries of the affected region to use for data collection, analysis, and asset mapping; and

2)    Creating a data-driven regional SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis for the region.

The first assignment presented its own set of challenges. “The message from the Department of the Labor was, ‘Make your decision on what the data shows you,’“ recalls Kim Didier, director of the Newton Development Corporation, a founding partner of the Newton Transformation Council. “What EMSI showed us was there were lots of assets in the 10-county region.” However, a deeper look made it clear that it would be best to hone in on a seven-county area—minus the three counties that make up the Des Moines metropolitan area.

On the other end of the spectrum, Maher & Maher handled organizational tasks for the project that included an 85-person leadership group. It led strategic planning efforts and facilitated collaborative decision-making and strategy implementation.

Solution

With the structure of the project in place, Didier and other stakeholders in Central Iowa started to recruit up-and-coming businesses to the area and support entrepreneurial endeavors. Instead of relying on one major manufacturing power, the area now has leadership that understands the importance of a diversified economic base. “That’s such a huge shift from the last 113 years,” Didier says. “We were clearly not as aggressive as we are now because we didn’t have to be. Now, our world’s changed. We’re focusing on ways of diversifying the economy.”
Based on an analysis of the available workforce, facilities, and other regional assets, regional leaders began to focus on drawing alternative energy companies to the area.

Outcome

By the fall of 2008, Newton had attracted more than 1,200 new jobs through an impressive list of advanced manufacturing and high-tech companies.

•    TPI Composites Inc., a wind turbine blade manufacturer, is slated to bring in 500 jobs when it hits peak production.

•    Trinity Structural Towers Inc., which makes massive steel towers for windmills, now occupies the old Maytag facility and should bring in another 140 workers when it’s at full capacity.

•    Caleris, an information technology and outsourcing firm, has also relocated to Newton and is on track to have 300 employees in the near future.

•    Iowa Telecom, the second largest local telephone company in Iowa, purchased the former Maytag corporate headquarter buildings to create its own headquarters and add another 150 employees to its Newton operations.

•    Springboard Engineering, an entrepreneurial start-up company created by 51 former Maytag R&D staff, now provides product development, prototyping, and testing services from Newton to international companies.

•    In Marshalltown, about 30 miles north of Newton, development efforts have brought in a 200-seat call center.

“We’re getting close to breaking even with capturing new jobs after the loss of Maytag,” Didier says.

By all accounts, it’s been a remarkable reclamation project. Didier credits the success to two things—the development of social networks and a data-driven strategy. It’s critical to have access to labor market information instead of relying on anecdotes or word of mouth, she says. “From the standpoint of trying to recruit new businesses and assist new businesses, it’s so hard to make decisions based on anecdotes. When you’re asking a business to make a $25 to $30 million investment, they’ve got to be 100 percent sure that you’ve got a skilled workforce.”

References and links

 “A Splash of Green for the Rust Belt.” New York Times.

“Is There (Middle Class) Life after Maytag?” New York Times.

“Iowa Town Prepares for Maytag Closures.” National Public Radio.

“U.S. Labor Department Announces $250,000 Grant to City of Newton, Iowa, to Assist Dislocated Workers.”

Newton Development Corporation

Maher & Maher

About EMSI

Economic Modeling Specialists Inc. (EMSI) is a professional services firm that offers integrated regional data, web-based analysis tools, data-driven reports, and custom consulting services. EMSI has served thousands of workforce, education, economic development, and other policy professionals in the U.S., Canada, and the United Kingdom, and the company’s web-based Strategic Advantage research and analysis suite is used by over 2,500 professionals across the U.S. For more information, call (866) 999-3674 or visit www.economicmodeling.com.

A recent socioeconomic report by EMSI on England’s further education colleges has revealed that “the millions of students who have been through the nation’s colleges since 1993 collectively left the economy £28 billion richer last year.”

For every pound invested by government in colleges, the taxpayer sees a return on investment of £1.70, according to an economic analysis commissioned for Colleges Week to measure further education’s impact.

The combined socio-economic benefits and savings achieved by colleges yields the taxpayer a better rate of return than if they had invested the cash in the stock market, according to Economic Modelling Specialists Inc. (EMSI), a US-based company.

David Collins, president of the Association of Colleges, which commissioned the EMSI study, said: “As we mark the first Colleges Week, this research shows clearly that England’s further education colleges are a sound investment from multiple perspectives.

Read the full story in the Guardian here.

A recent EMSI impact study has concluded that Connecticut community colleges have a roughly $5 billion impact every year on the state’s economy.

State government receives returns from its community college support “in the form of increased tax revenue and savings associated with avoided social costs.” Every $1 in taxes invested today in the Connecticut Community Colleges returns a cumulative $16.40 over the course of the students’ working careers. Social benefits that result from support of the community colleges include reductions in unemployment, welfare costs, health care costs, incarceration rates, and criminal justice costs, according to the report.

Associate degree graduates see their annual income increase on average by $231 annually for every credit completed at Connecticut’s Community Colleges. Their annual salary is approximately 39 percent more than someone with no more than a high school diploma, reports EMSI. Average lifetime earnings of the CCC graduate will increase by $8.10 for every dollar they invest in their college education. Over a lifetime, CCC graduates can earn approximately $600,000 or more in additional income as compared to high school graduates.

Enrollment at the state’s 12 community colleges has spiked to more than 50,000. This is the sixth straight year record enrollment has been set.

Read the full story here.

The Labor Department announced today that the nation’s unemployment rate hit a 14-year high in October at 6.5 percent, accounting for 240,000 lost jobs. More details can be found here and here.

This news is no doubt grim, but EMSI offers a range of services to assist workforce, economic and education professionals locate new areas of work for job-seekers. You can read more about those services in this article: EMSI announces customized solutions for areas facing layoffs.

If your economy is facing the challenging situation of dealing with recent layoffs and needs information to better understand the effects of the changes and how workers can transition into promising career areas, contact us to learn more on how we can help.

Sean Moore
Research Analyst
Rural Policy Research Institute (RUPRI), Center for Regional Competitiveness
Missouri

Sean Moore is using EMSI’s labor market analysis to generate an economic development strategy for the state of Minnesota. First, Moore and his colleagues at RUPRI’s Center for Regional Competitiveness completed a preliminary analysis of Minnesota counties, in part by using EMSI’s web-based tool, Strategic Advantage, to look at industry and occupation figures. The next step was to create a development plan based on cluster analyses. With data from every county in Minnesota at his disposal, Moore is able to quickly and easily run multi-county breakdowns. SA has been “a labor-saving device in terms of producing quick snapshots of regional economies,” he said.

Ingrid Skadberg
Director of Institutional Research
Quinsigamond Community College
Worcester, Massachusetts

Quinsigamond Community College used EMSI’s analysis to explore the possibility of a second campus location by getting critical labor market information on the area surrounding the new site. With booming enrollment and space constraints in the existing campus, it makes sense for QCC to branch out, and a natural landing spot is southern Worcester County. Current QCC students who live there commute up to 45 minutes to class. However, administrators still needed to show there were ample employment opportunities near the new site. Using ZIP code-level data and analysis from EMSI, Ingrid Skadberg, Director of Institutional Research, was able to show local job growth in manufacturing, home health care services, and publishing. This information will inform program development when QCC goes forward with expansion.

Kerri Nawrocki
Director of Institutional Research
Colorado Community College System

When the State Board for the Colorado Community College System (CCCS) had questions about the rapid growth of its for-profit competition, Kerri Nawrocki was able to use EMSI’s tool, Strategic Advantage, to perform a detailed analysis comparing CCCS to its private, for-profit counterparts. With SA’s user-friendly, integrated data, Nawrocki was able to differentiate between CCCS and the for-profit institutions to find the top programs, market penetration, tuition costs, retention rates, and graduation rates of each institution type. This analysis served as the basis for Nawrocki’s report, which is entitled “Competition from Private For-Profit Post-Secondary Institutions: A Brief Snapshot of the Colorado Two-Year Market.” Nawrocki says she “hopes the intelligence gathered in this report serves as a guide for CCCS to better differentiate itself in the face of growing competition.”

Meg Shope Koppel
Director of Research
Philadelphia Workforce Investment Board
Pennsylvania

Meg Shope Koppel is putting the finishing touches on a labor market breakdown of the career and technical education programs in the School District of Philadelphia, and the state-mandated report has been facilitated by EMSI’s analysis tool. She was able to identify high-growth tech-related occupations in Philadelphia and analyze existing and relevant postsecondary program areas tied to those occupations. After delving into the data, Shope Koppel and her colleagues could better explain the need for further education beyond the required 1,058 credit hours in the career and tech ed programs. She used convincing labor market information to conclude that high school graduates need to earn at least a postsecondary certificate to reach a family-sustaining wage.