Across U.S., the Recovery Is Indeed Uneven
In the Golden Triangle of southeastern Texas, where the piney woods give way to erector-set petrochemical complexes, help is definitely wanted. Mobil, Chevron and other big companies are on a building binge and good times are back in the oil patch.
Half a continent away in Connecticut’s Fairfax County, retailers in downtown Stamford are quizzical when asked about the recovery. Business is bad--in jewelry stores, in shoe shops and at the lunch counters--as big employers downsize to cope with the stubborn Northeast slump.
Not so in blue-collar Duluth, the rough-hewn Minnesota manufacturing center on Lake Superior, where things have been up so long that residents no longer talk about down. The shine of the remade Rust Belt glows in its steel mills, shopping centers and bustling port.
These are the snapshots of a U.S. economic recovery that the Federal Reserve Board says “continues to be uneven across the country.” As some areas are still in recession, particularly the Northeast, New England and Southern California, others are enjoying a revival, particularly in the Midwest.
The manufacturing sector is the bright spot. Some of the areas now booming were on the bottom a couple of years ago, as they struggled to retool their aging factories to compete with tough international competitors.
Problems persist nationwide in retail sales, real estate and financial services. Consumers are still wary of the economy’s strength, keeping a lid on spending and further restraining the rebound.
What follows is the economic view, as reported by Times staff writers, from three cities in different regions of the United States.
Beaumont, Tex.
Here, where the gushers at Spindletop ignited the modern oil industry, an economy decimated by the oil bust is getting its second wind.
A sign at the gate of the sprawling Mobil Corp. refinery in Beaumont proclaims a $500-million modernization project employing 1,200 construction workers. In neighboring Port Arthur, a $500-million petrochemical expansion project is under way, and in nearby Orange, a $100-million job at Chevron Chemical Co. is providing construction work for 650 people.
As the rest of the nation stumbles through a recession, the Gulf Coast refinery towns of Beaumont, Port Arthur and Orange--together known as the Golden Triangle--are prospering in a petrochemical-led construction and modernization boom.
In the last two years, $2.5 billion in building has been announced in the area, creating jobs at a faster rate than any other metropolitan area in Texas. Nationally, the Beaumont-Port Arthur area ranks fourth in job growth among 292 metropolitan areas. Unemployment in Beaumont has dipped to 7%, half of what it was five years ago.
“It’s great, we’re having better times than we’ve had in a long while,” said Larry Webb, an 11-year refinery veteran turned private employment counselor. “All the major oil companies are adding jobs, and the economy is picking up.”
The influx of construction workers has been felt in the retail and real estate sectors. During the first six months of 1991, gross retail sales in Beaumont rose 19% over last year’s level. Apartments are 98% occupied, and home values are rising.
At the editorial offices of the Beaumont Enterprise, a secretary flips through the Sunday paper--chock-full of job listings--and is pleased to find the classified section still there. “We just can’t keep the papers together, so many people come in here looking for the want-ads,” she said.
The construction boom could not have come soon enough for these southeast Texas towns, which fell onto hard times when the price of oil dropped to about $9 a barrel in 1986. Unemployment in some areas reached 22% as refineries laid off workers or closed operations altogether. Plant workers left town in droves, and local businesses fell one after another in quick succession.
“You worked at a refinery, you thought you had a job for life. No more,” said Tom Bradley, a 47-year-old carpenter who was laid off three times as three Beaumont-area plants closed. “It’s a very humbling experience.”
Petrochemical expansion spurred by increased worldwide demand for ethylene and propylene improved the dismal fortunes of the local economy, according to the Federal Reserve Bank in Houston. In Beaumont, additional construction jobs have come from plants and refineries seeking to conform with stringent new EPA standards by modernizing outmoded, inefficient equipment.
“Having a narrow economic base in petrochemicals and refining killed us in the ‘80s but it’s in our favor in the ‘90s,” said Charles Hawkins, chairman of the economics department at Lamar University in Beaumont.
But area officials know that when the construction stops--sometime in the next three years, many of the area’s longstanding economic problems may re-emerge. The highly automated new plants now under construction will require many fewer workers than the old ones.
The industrial Golden Triangle is facing structural change: Fewer people are needed to produce more products. The expansion at Star Enterprise--a Texaco-Saudi joint venture--now requires 2,000 construction workers, but will create only 40 new permanent jobs.
Aware that the current prosperity could be fleeting, area leaders are trying to diversify the local economy, offering generous tax abatements and other inducements to manufacturers from Minneapolis to Taiwan. But with its foul-smelling refinery air and humid Gulf Coast climate perfect for mosquitoes and dragonflies, the Golden Triangle can be a hard, unglamorous sell.
County leaders have had considerable success, however, promoting rural, isolated areas as possible prison sites. A 2,250-bed maximum security state prison is now under construction on county-purchased farmland just outside of Beaumont. A few miles down the road, the county bought another 1,100 acres for a proposed 2,750-bed federal prison that will bring 850 jobs to the area.
There are also plans to make Beaumont a regional health center for rural East Texas towns that have been forced to close their own hospitals. Already, two large area hospitals are spending millions to expand and update their their medical facilities.
In downtown Beaumont, amid rows of shuttered stores, pockets of construction are evidence of a reviving economy. A funky old fruit warehouse has been converted into handsome, red-brick law offices. The downtown Sears store, built circa 1940, is being renovated into the U.S. attorney’s office.
For all of the current activity, though, residents of the Golden Triangle--remembering years of deep, enduring economic troubles--can only muster a careful, cautious optimism.
“Right now, we’re doing great,” said Robert Crawley, a labor market economist at the Texas Employment Commission in Beaumont. “Whether it lasts into the future is hard to predict.”
To be nailed down next month, Fedo boasted, is a big new Northwest Airlines maintenance plant for its growing Airbus fleet--a heavily subsidized project that promises 1,200 jobs at $40,000 and up. Duluth outbid Minneapolis, Seattle and Detroit for the prize.
Total employment in Duluth throughout the recession has held steady at 38,000, the jobless rate climbing about a point to 6% this year because more people entered the job market, Peterson said. Of those, about 17% are in mining or manufacturing--well below the national average--versus 26% in lower-paying service jobs. That ratio has roughly reversed since 1981, tending to erode wages but ease the boom-bust cycle.
Meanwhile, tonnage shipped through the Duluth port, employer of 1,600 here, has climbed each year since 1985. The drought that drove down grain exports through the late 1980s was more than offset by a surge in shipments of “clean” Montana coal now favored in the eastern United States.
In this recession year, tonnage so far is down 1.2%. But this month, early shipments from a bountiful wheat harvest in the Great Plains are boosting the port’s lucrative grain trade. And an anticipated gain in auto production has steelmakers stepping up orders for taconite before the Great Lakes freeze up, typically in late December.
Fedo is criticized by some for his coziness with business. The city and state pledged hundreds of millions of dollars in grants, tax breaks and other incentives to attract the paper mill and the Airbus hangar, linking Duluth to two more dicey industries. But he said it spreads the risk.
“Now if there’s a downturn in steel, we’re not a basket case,” he said. “If grain sales turn bad in the Soviet Union, two or three people won’t jump off buildings in Duluth, Minn.”
On the one hand, the loss of banking jobs from the coming merger of Chemical Bank and Manufacturers Hanover Trust Co., and other banking industry consolidations, will hurt some Stamford residents who commute to New York.
But Stamford will also be a big beneficiary from New York City’s woes.
For example, Morgan Stanley & Co., the big New York investment bank, has stated that it will move to Stamford if it decides to relocate from New York and has purchased an option on a piece of land on which to build a new headquarters.
