Elk County: Ground zero for rising unemployment

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The Philadelphia Inquirer

By Angela Couloumbis
Inquirer Harrisburg Bureau

RIDGWAY, Pa. - Growing up in a small town in Elk County, Chris Squires could rely on this truth: He would always be able to land a job in one of the dozens of thriving manufacturing plants in the region.
But the nation's sharp economic downturn has shaken that once-ironclad conviction. Those jobs are quickly disappearing in his hometown, where most of the factories produce parts for the hard-hit auto industry - and his was among them.
"I always thought that if you had a factory job, you were set," said Squires, 35, who nine months ago lost his job as a laborer at a plant that works with powdered metals. "But anymore, it's sink or swim."
And not just for Squires. Elk County has the distinction of having lost the highest percentage of jobs in Pennsylvania in the second half of 2008, according to the state Department of Labor and Industry.
The sparsely populated county at the foot of the National Allegheny Forest in northern Pennsylvania has become ground zero for the state's growing problem of rising unemployment.
The county lost 500 jobs between last May and November, accounting for a startling 36 percent increase in the number of unemployed residents. Its 7.7 percent unemployment rate is higher than the state and national rates.
Neighboring Cameron County lost the second-highest percentage of jobs in that same time period. Philadelphia ranked 48th out of 67 counties.
The dire statistics surprise even Elk County residents, who have long prided themselves on an entrepreneurial spirit that helped build a homegrown powdered-metal manufacturing base during the last century. Today there are about 50 plants, ranging from national corporations to family-owned businesses.
"It's like a sickness," said Matt Quesenberry, director of the county Planning Department. "You used to hear about unemployment, but it was always somewhere else. Suddenly, it's happening to your neighbors, your friends, your family."
Yet it is no mystery why it is happening in Elk County. The biggest industry here is manufacturing - and it is king, employing roughly 40 percent of the county's population of 35,000, according to county officials. And of those in manufacturing, the majority work for powdered-metals plants or related businesses.
The area's powdered-metal plants use heat and pressure to turn finely powdered metal into solid parts, such as connecting rods and transmission gears, primarily for the automotive industry.
And there lies the problem: The fortunes of the powdered-metal industry rise and fall with the health of the auto industry, which has experienced record drops in sales.
"Think about it," said Jason Gabler, an industry representative on the region's planning and development commission. "Every American car has about 40 to 50 pounds of powdered-metal parts. If the auto industry is not doing well, we aren't doing well."
In Elk County, the vast majority of powdered-metal plants produce parts for the auto industry, said Jim Aiello, vice-president of St. Marys Pressed Metals Inc., a small powdered-metals plant in Ridgway.
Many of the larger companies, which have had the bulk of layoffs, declined to be interviewed. One, Metaldyne Corp., has laid off 163 employees since August, but planned to rehire 10 people this week, the company said.
Metaldyne is hardly the only one suffering. County residents say many plants are collapsing shifts and reducing hours, leading to a large-scale shedding of employees.
Aiello's business, founded by his father in the late 1960s, has fared relatively well - there have been no layoffs. But that is because it supplies parts to medical-equipment manufacturers, air-conditioning companies, and commercial laundries, among others.
Still, like almost everyone in town, Aiello can name a half-dozen people who have lost their jobs. And the unemployed are having a hard time reentering the workforce, because they've done only factory work for most of their lives and job opportunities outside powdered metals are scarce in the county.
"To find something else around here, it's tough," said Elk County resident Bernie Greenawalt, 43, who was laid off from his die-setter job at a powdered-metals plant two weeks ago.
Like many other plant workers, Greenawalt made a decent wage: $18 an hour, plus occasional overtime. And he wants back in.
"My kids ask me all the time: 'Dad, what are you going to do?' There's not much I can do," said Greenawalt, who is collecting state unemployment benefits and has only three weeks of health insurance left. "I'd love to get back into powdered metals - you know, work for a small, locally owned plant."
Powdered metals isn't the only game in town. There are other employers in the region, including logging, health care, and some retail.
But it is the dominant industry. The concentration of people employed in powdered metals in Elk and its surrounding counties is 600 times greater than the concentration anywhere else in the United States, according to Rose Baker and David Passmore, professors of workforce, education and development at Pennsylvania State University who are studying how competitive that industry is in Elk County.
And the powdered-metals industry has a long, proud history in the county, which was named after the elk that used to roam there in large numbers.
In the early 1900s, entrepreneurial Elk County residents began using powdered carbon to make graphite brushes for electrical motors. That technology soon developed to include the use of powdered metals.
The industry began to thrive as World War II approached, with local companies using powdered metals to make self-lubricating metal bearings.
"There was so much business out there, you couldn't keep up with it," said Norbert Arnold, 88, a retired Elk County chemist and metallurgist, adding that many companies produced parts for aircraft.
After the war, powdered-metal workers began leaving the larger companies and launching smaller ones of their own. That is why, today, there are so many powdered-metal plants in the county.
"There was - and is - a real cluster of energetic and industrious people here," said Elk County Commissioner Daniel R. Freeburg. "To this day, someone will be working in a plant and they'll have a better idea of how to do something, so they'll leave and start something of their own. There's a whole tradition of that in Elk County."
Squires, the former powdered-metals plant laborer who was laid off, has had enough of tradition.
When he lost his job last May, after years of working in powdered metals, he was initially scared about being able to find work.
But as the reality sank in, he began to see it as an opportunity to change his life.
He and his girlfriend moved to Exton, where he is pursuing a nursing degree.
They had a baby boy, Keegan, last week.
"I'm done with factory life," said Squires. "There's no stability there anymore. I'm better off doing something completely different with my life."