GM Closure Also Hurts Merchants : Economy: Bars, restaurants and shops once frequented by auto workers feel the pinch as sales drop up to 75% after the departure of 2,600 employees.

During their 26 years as owners of the Trophy Room bar in Van Nuys, Ray and Pearl Foster have seen business drop during strikes and temporary closures at the nearby General Motors plant. But it would always climb back when the workers returned to the plant.

Along the way, they have made lifelong friendships with the auto workers who regularly gathered at the bar after work for a beer, a game of pool or a round of darts.

But since the plant closed permanently last month, putting many of the 2,600 employees out of work, business at the bar has dropped off about 40%, and Ray and Pearl Foster are talking about selling the place and retiring.

Like the owners of many other bars, restaurants and small shops that relied heavily on the dollars spent by GM workers, the Fosters’ business is feeling the economic ripple effects of the closure of one of the San Fernando Valley’s largest employers.

Although it’s still the site of pool tournaments and dart games, things will never be the same at the musty little bar near the corner of Titus Street and Van Nuys Boulevard.

“When you’ve been around for 26 years, it’s more of a friendship loss than a business loss,” Ray Foster said.

Such heartfelt emotions were echoed by many shop owners who have seen a generation of plant workers retire, only to be replaced by their children.

“Right now, I miss my friends,” said Flower Ngy, owner of Opie’s, a bar across the street from the plant that has suffered a 50% to 75% drop in business since the plant closed. “I wish them good luck.”

For financial and real estate experts, the decline in business around the plant is no surprise. They say the mostly retail area along Van Nuys Boulevard around the plant has been depressed for several years, probably because the GM closure has been expected since 1989.

And they predict that the ripple effect will only drag the local economy down further by reducing real estate values and increasing retail vacancy rates in the area.

Jay Berger, a real estate professor at Cal State Northridge, said the area will see many more businesses close if landlords do not reduce rents for those small businesses that are losing revenue because of the plant closure.

“That happens any time you have the closing of a larger employer,” he said.

Benjamin Reznick, chairman of the Valley Industry and Commerce Assn., said the closure of the GM plant is devastating for the area because each manufacturing job creates several other jobs for suppliers and service-oriented businesses.

“Until someone comes in and fills the void with some kind of manufacturing jobs, you are not going to get a big change,” he said.

Richard L. Paley, executive vice president of the United Chambers of Commerce of the San Fernando Valley, agreed. “The area has been in a decline for a while and obviously the plant closure speeds up the decline,” he said.

He said the only way to reverse the trend is for local elected officials to promote a pro-business atmosphere that would help rejuvenate the economically depressed area.

“We need to have our City Council promote business and not negate business,” Paley said.

So far, no serious bids to purchase the 45-year-old plant or the 100 acres of land it sits on have been made public.

GM plans to move production of Camaros and Firebirds to a newer plant in St. Therese, Canada. One of the reasons given by GM representatives for the move is that it will put production closer to parts suppliers, who are mostly located in the Midwest and East.

The effect on the laid-off employees will be softened by generous benefits provided under the United Auto Workers’ contract with GM. Those who attend classes and retraining programs offered by GM will receive full wages and benefits until the current contract expires in September, 1993. Others will collect 85% of their normal salaries.

But for shop owners around the plant, there was no soft impact:

* Mike’s Pizza, on Van Nuys Boulevard, around the corner from the Trophy Room, suffered a noticeable drop in its lunchtime crowd. “We felt a difference, but we will survive,” said restaurant Manager Cindy DelBagno.

* The Jelly Donut, also on Van Nuys Boulevard, has had a 30% drop in business, the equivalent of about $4,000 a month, said shop owner Charlie Lao. The shop, which sells doughnuts and hamburgers, had operated 24 hours a day to serve the GM night shift, but shortened its hours when GM eliminated the late shift last year. He said he plans to talk to his landlord about lowering his rental rates so he can afford to stay in business.

* The Wok Chinese Food, a restaurant located in a shopping strip near the plant, suffered a 25% to 30% drop in business, said Chien Sha, who bought the restaurant with his wife, Shun Yi, only four months ago. “We used to have long lines,” Chien Sha said. “Now, we don’t have any.”

* A Burger King located next to the plant used to get between 100 and 150 GM workers a day, said Manager Manuel Fuentes. Now, he said, the restaurant regularly serves about 25 of the GM workers left behind to do final maintenance work around the plant.

* A Carl’s Jr. located about two blocks from the plant suffered a 20% to 25% drop in its lunchtime business, said Patty Parks, a Carl’s Jr. spokeswoman.

But the most severe drop in business was at Opie’s, the small, dark bar directly across the street from the GM plant.

Ngy said she bought the place about 12 years ago, back when GM owned half of the U.S. car market but before Japanese car companies forced the company’s share to plummet to 35% of U.S. sales.

She said the bar was regularly frequented by happy, noisy auto workers who played pool and darts and spent their money generously on beer and lottery tickets. The workers would rush in at lunchtime or after work and order a few beers and chat about the day’s events, she said. Sometimes, Ngy said, they would buy food from a catering truck that would park in front of the bar.

A few GM workers still come around, Ngy said, usually because they are in the neighborhood to pick up a paycheck at the GM plant or to meet with other union members in the UAW hall next door.

But now, they hardly spend any money, she said.

“They are afraid,” she said. “They don’t know what is going to happen to them.”

As for herself, Ngy said she doesn’t know what the future holds. She hopes that some other business will fill the void left by the GM plant closure.

“There is nothing I can do,” she said. “I just have to hang on for awhile.”