by Erin Ham and Nicole Summers-Gabr
This piece was originally published in The Community Psychologist (TCP) Summer 2023 Volume 56, Number 3. Past TCP columns are available online, at https://www.scra27.org/publications/tcp/
Twenty percent of the population, or one out of five people, live in rural USA, where the rural population holds 12.4 percent of the manufacturing jobs (Bureau, U.C., 2022; America Counts Staff, 2017). It begs the question of how great the impact is on those rural communities that host a plant or manufacturer. Communities that host these types of companies may see positive influences on their local economy, the number of jobs available to their population, and the increased revenue from property taxes that help support social institutions (schools, police, and fire stations), and they could also find negative influences on the environment, air quality, or complications that arise from situations such as leaks (Turner et al., 2016; State Fiscal Health, 2021). While the impact of plants and manufacturers is often discussed while the companies operate, what impacts are felt if those companies close down?
Deciding what to do with closed plants or manufacturers is an environmental issue and a public health issue. At the end of 2022, there were 456 coal-fired power plants in the USA, with Indiana having the most at 34 plants (Joyce, 2021). Almost a quarter of the coal power plants currently operating in the USA will close before 2030 (Brown, 2022). In some cases, states are getting involved in plant closure processes and timelines, either for environmental purposes, the plant has reached the end of its life, providing incentives for companies to shut down by a particular year, or to assist with the rollout of a predicted shutdown slowly so as not to significantly impact a community overnight. For example, in 2016, the Washington legislature passed a bill (S.B. 6248) that aimed to mitigate risk from plant closures by allowing the state to help cover costs of plant retirement and remediation, ensuring a transition process for specific plant units (Global Power Law & Policy, n.d.). In 2017, the Montana legislature became involved in how plants in their state go through retirement, reduction, and remediation. That series of bills aimed to ensure timely, safe closures and sometimes financial support to communities experiencing shutdowns (H.B. 22, H.B. 647, S.B. 140, and S.B. 339) (Montana Legislative Branch, 2017). Another example is the 2021 climate legislation signed in Illinois (S.B. 2408) that aims to shutter all of the state’s coal plants by 2045 (Harris III, 2021; Joyce, 2021). While it may be easier to follow plant closures, manufacturing towns around the rural U.S. are experiencing fallout from closures as well.
The Magnitude of Plant Closures in Rural USA
There are a number of recent illustrations of the impact of manufacturer closures on rural communities. For instance, General Motors closed its Lordstown, OH plant in 2018, which created a loss of 8,000 jobs in the area (Kaufman, 2019). In a second example, Vitro Automotive Glass closed in 2020 in Evart, MI, with a loss of 125 jobs (Business Watch, 2020). In a third and more recent example, in 2023 so far, announcements were made by Pactiv Evergreen in March to close operations in both Canton, NC, and Olmsted, OH resulting in a loss of a combined 1,300 jobs, Sonoco Hutchinson Paper Mill in Hutchinson, KS closed in March resulting in a loss of 116 jobs, and Quad/Graphics Inc. plans to close its operations in Leominster, MA by the end of April resulting in a loss of about 60 jobs (Peters, 2023; Mannette, 2023; Doyle, 2023). These are all examples of manufacturers that closed in rural America within the past five years, 2018-2023. While the initial impacts on communities from closed plants/ manufacturers (referenced as “companies” throughout the rest of this article) are often discussed, what does not seem to be often discussed is what communities can proactively do to protect themselves if local companies close.
Community Impact on Plant Closures in Rural USA
Outside of the immediate loss of jobs, the impact of closures is acutely felt by rural communities because of the long-term ramifications closures can bring to the community as a whole. There are three central issues of closures that can impact the well-being of residents in rural communities:
1. Long-term effects on public resources from loss of tax revenue
2. Effects on community health if buildings/property is abandoned
3. The creation of “Zombie” homes
Starting with the first issue on impact of the loss of tax revenue, initial observations have shown that once a company shuts down operations, oftentimes the revenue a community receives from taxes is significantly decreased. Consequently, the loss of revenue could mean that the financial support for public resources may be compromised (State Fiscal Health, 2021). A reduction in revenue from taxes also means fewer funds for roads, libraries, and parks (Fechter, 2022). It could also mean that police departments, fire stations, and school districts could lose a significant source of funding due to the loss of property taxes, meaning that there will be a lack of reinvestment in quality education facilities and staffing (State Fiscal Health, 2021 and Turner, et al., 2016).
Turning to the second issue around the impact of abandoned buildings. Some towns have to bear the burden of supervising the property. One reason security is necessary is that companies can leave machinery behind, which can place people at risk who may break in and injure themselves by vandalizing or attempting to use them. Another reason security may be necessary is that an empty property is at risk of turning into a place where people experiencing homelessness or addiction may take refuge. Issues become compounded as the building no longer has regular upkeep, running water, or utilities; it can quickly become a larger public health issue. Either way, the subject of an empty building will continue to penalize rural communities through obligatory continued investment.
Finally, the third issue concerns thwarting the creation of “zombie” homes. These homes are ones that owners walked away from, either wholly abandoned or left for the bank to reclaim. Thus, leaving neighbors to deal with the unkept property and find that their own property is devalued (Baker, 2017). If a significant number of homes are abandoned, the community may find itself with the public health issues that arise from such a situation; unkept property can lead to critter infestations, places for people experiencing homelessness to use, or shelter for drug use to take place (Williams, 2018). Bensenville, IL is a prime example of what a town could look like if it experiences a mass exodus. While Bensenville is not a rural community, the photographic evidence helps the argument for finding proactive solutions to prevent such a situation.
Potential Proactive Policies to Support Communities
Moving forward, it is important to think of policies that could be formed to protect rural communities from the consecution of issues of company closures. Three potential policies come to mind:
1. States allow local governments to restructure what/ how much taxes they collect
2. States require remediation to occur at the time the property closes and for companies to submit predicted closing plans to their local government
3. Require banks to manage property upkeep until sold, rented out, or town down.
One idea is for states to address their policies on how they allow local governments to structure their taxes and for the federal and state governments to restructure the funding streams to support public schools. A policy could be created so companies still pay the property taxes at the amount they were paying prior to closure until the end of the school year or for the next six months, so that the school district does not feel such an immediately harsh financial impact. This gives the school district a grace period to address the financial consequences they may face in the coming school year and not in the immediate month(s).
A second solution is for states to add requirements when local governments discuss closing plans with companies to remove all machinery from the property within one year after closing operations. Companies are already technically responsible for property and building upkeep (mowing, windows, doors, roofs, etc.) and property security. A fine for each time the city has to step in and handle anything regarding the property could provide extra incentive for companies to maintain proper oversight until the property is either repurposed or sold. Additionally, some states require the company to have the property cleaned before leaving the property unattended, while other states require the company that purchases the property to be responsible for site remediation. A policy change (preferably at a state level) regarding when remediation occurs could prevent communities from having to care for abandoned property altogether. If all states required companies to be responsible for remediation of the facility at the time the property closes instead of when the property sells, then the headache many communities face after a company closes could be completely avoided (McGraw, 2017).
Another idea on how to systematically address the potential threat of closures is to build in an exit strategy at the time plans are developing for a new plant or factory. Companies newly forming, going through significant remodeling, or those considering building expansion now often develop such a plan internally, which could point out the lifespan of machines, when equipment needs to be replaced, or how to handle a closure. However, these plans are not a requirement and they do not need to be shared back with the public. Moving forward, if this became a requirement for all large new companies or expansions, it would not add a significant financial strain to require documents to be supplied to the community that shows the plans for closure should it ever occur. With this policy, local governments could clearly see what companies have planned should a shutdown occur and can also partner with the company to support the plan or help resolve any gaps the plan may have of which the company may have been unaware.
A third solution is for communities or states to develop a policy in which banks are required to upkeep abandoned or foreclosed homes or properties within city limits until the home is sold or torn down in order to help prevent the creation of “zombie” homes. Some states or communities have already created such a requirement that banks must maintain properties until they sell or are demolished (Baker, 2017). With a policy in place that requires property upkeep by the financial institution, communities may find banks are motivated to sell a home more quickly, remodel it and rent it out, or demolish it.
Several ideas were covered that could strengthen communities should policy-makers proactively plan for company closures. First, restructuring a community’s local tax system may create a more stable financial environment for entities tax money helps support (e.g., school districts, police departments, and transportation departments). Second, requiring companies to remediate a closed property immediately could ensure the environment (soil, water, air) is safe for those living in the community. Additionally, securing the building and immediately removing all equipment or furniture also helps prevent the empty building from becoming a public health concern.
Furthermore, requiring companies to submit possible closure plans to the local government helps the community proactively plan to support its members in the event of a closure. Finally, to ensure the community does not fall into disrepair, the addition of banks taking over property upkeep of abandoned homes or buildings will help to further ensure the community’s appearance, as the physical environment of a town can have major impacts on both a person’s physical and mental well-being (Williams, 2018). In conclusion, the discussion on how to proactively address company closures needs to be brought to the forefront at a policy level to build stronger and healthier rural communities. To learn more about this issue, visit Moving Pillsbury Forward. For questions about this article, please reach out to Erin Ham (firstname.lastname@example.org).
Aizarani, J. (2023, January 31). Number of operational coal-fired power plant units in the United States as of 2022, by state. Statista. https://www.statista.com/statistics/1252352/us-coal-power-plants-by-state/
America Counts Staff. (2017, August 9). More work in education and health care. https://www.census.gov/library/stories/2017/08/rural-economy-not-completelydependent-on-farming.html
Baker, B. (October 24, 2017). Wanting to avoid zombies, states act to regulate closing power plants. Nixon Peabody. https://www.nixonpeabody.com/insights/alerts/2017/10/25/states-act-to-regulate-closingpower-plants
Brown, M.T. (November 7, 2022). Nearly a quarter of the operating U.S. coal-fired fleet scheduled to retire by 2029. U.S. Energy Information Administration.https://www.eia.gov/todayinenergy/detail.ph
Bureau, U. C. (2022, December 29). Nation’s urban and rural populations shift following 2020 census. Census.gov. https://www.census.gov/newsroom/pressreleases/2022/urban-rural-populations.html
Business Watch. (2020, August 21). Michigan town wonders what’s next as factory closes and 125 jobs are lost. Bridge Michigan. https://dev.bridgemi.com/businesswatch/michigan-town-wonders-whats-nextfactory-closes-and-125-jobs-are-lost
Doyle, T. (2023, March 13). Leominster packaging plant to close, lay off 60. Worcester Business Journal. https://www.wbjournal.com/article/leominster-packaging-plant-to-close-lay-off-60
Fechter, J. (2022, April 22). As Texas home values skyrocket, state officials wrestle with how to slow property tax increases. The Texas Tribune. https://www.texastribune.org/2022/04/22/texas-property-taxes-explained/
Global Power Law & Policy. (n.d.) Washington state legislation may facilitate cost recovery for coal plant retirement. L&L Gates. https://www.globalpowerlawandpolicy.com/2016/04/washington-state-legislation-mayfacilitate-cost-recovery-for-coal-plantretirement/
Harris III, N. (2021, February 26). Bill status SB2408. 102nd General assembly of the State of Illinois. https://www.ilga.gov/legislation/BillStatus.asp?DocNum=2408&GAID=16&DocTypeID=S B&SessionID=110&GA=102#actions
Joyce, S. (2021, September 15). Illinois governor signs bill shutting coal plants for good. Bloomberg Law. https://news.bloomberglaw.com/environment-and-energy/illinois-governor-signs-billshutting- state-coal-plants-for-good
Kaufman, D. (2019, May 2). The end of the line. The New York Times. https://www.nytimes.com/interactive/2019/05/01/magazine/lordstown-general-motorsplant. html
Mannette, A. (2023, March 6). Hutchinson paper plant is closing its doors and letting people go without notice. The Hutchinson News. https://www.hutchnews.com/story/news/2023/03/06/the-sonoco-hutchinson-paper-millis-closing/69978448007/
McGraw, D. (2017, June 14). America’s power plant problem. Pacific Standard. https://psmag.com/environment/what-to-dowith-americas-abandoned-power-plants
Montana Legislative Branch. (n.d.) Montana legislature, look up bill information, 65th regular session. http://laws.leg.mt.gov/legprd/law0203w$.startup?P_SESS=20171
Peters, A. (2023, March 13). Inflation pressure leads Pactiv Evergreen to close plants in North Carolina and Ohio. CoStar Group. https://www.costar.com/article/263032292/inflation-pressure-leads-pactiv- evergreen-toclose-plants-in-north-carolina-and-ohio
State Fiscal Health. (2021, July 8). Local tax limitations can hamper fiscal stability of cities and counties. The Pew Charitable Trusts. https://www.pewtrusts.org/en/research-andanalysis/issue-briefs/2021/07/local-taxlimitations-can-hamper-fiscal-stability-ofcities-and-counties
Turner, C., Khrais, R., Lloyd, T., Olgin, A., Isensee, L., Vevea, B., Carsen, D. (2016, April 18). Why America’s schools have a money problem. NPR.org. https://www.npr.org/2016/04/18/474256366/why-americas-schools-have-a-moneyproblem
US EPA News Release. (2019, May 7). Crescent forge & shovel site. United States Environmental Protection Agency. https://response.epa.gov/site/site_profile.aspx?site_id=14137
Williams, C. (2018, October 4). We build our community, and then it builds us. https://mhanational.org/blog/we-build-ourcommunity-and-then-it-builds-us-0