By Nathaniel  Zimmer
June 7, 2009
As the recession continues, the Southland is suffering as much as any part of the Chicago region.

East of Interstate 57, the foreclosure rate is sky-high. Estimated
unemployment has spiked in some south suburbs recently, hitting 17
percent on a seasonally unadjusted basis in Chicago Heights in March,
and settling at 16.5 percent in April.

With hard times gripping the country to a degree not seen for
decades, the SouthtownStar decided to take a look at how the situation
here compares to that in other areas and to past recessions, how bad
things might get and when conditions might improve.

Though it may not be the powerhouse it once was, manufacturing
still is a major employer in the Southland, and the recession has taken
a serious toll on the industry.

The south suburbs continue to be "a blue-collar area, dependent on
value-added manufacturing jobs," said Thomas Hall, senior vice
president and director of commercial banking with First National Bank.

But those jobs are getting scarcer. Many local manufacturers report
revenues "fell off a table" in the third or fourth quarter last year
and were down 20 percent to 30 percent or more early this year,
according to Hall, chairman of the Chicago Southland Chamber of

Geoffrey Hewings is director of the Regional Economics Applications
Laboratory at the University of Illinois. He sees unemployment in the
Chicago region as a whole rising to about 10 percent or possibly higher
and expects the south suburbs will be hit especially hard.

In some towns where unemployment is near or already in double
digits, "I do not think it unreasonable to think of 15 percent
unemployment rates," Hewings said.

There have been several mass layoffs in the area recently. Ford
Motor Co. eliminated some 900 jobs at its Southeast Side and Chicago
Heights plants. Calumet City-based Gareda Nursing Services reported in
December that it would cut 1,460 jobs. Electro-Motive Diesels announced
it would lay off 347 workers at its LaGrange plant starting in April.
Small and midsize local manufacturers also report they have been
reducing headcounts.

Diversified economy helps some.
Still, the south suburbs are nothing if not diverse, and wealthier areas show signs of resilience.

In Orland Park, Tinley Park and Homer Glen, unemployment remains
well below the April seasonally unadjusted state rate of 9.4 percent.

Foreclosure rates in southwestern Cook County suburbs, between
Interstates 55 and 57, have been among the lowest in the Chicago
region, although they spiked in the first quarter.

Beth Ruyle was executive director of the South Suburban Mayors and
Managers Association from 1979 to 2000. She thinks the area’s economy
is much more diverse and less reliant on manufacturing than it used to
be, and that the Southland will weather this recession better than the
one that battered it in the early 1980s.

In 1982, unemployment neared 10 percent in Oak Lawn, 15 percent in
Harvey and 19 percent in Joliet. Ruyle recalls "an air of unreality"
back then, as people slowly realized that the jobs that had left were
never coming back.

"It was really a time that was traumatic," said Ruyle, now a
consultant. "Because we have diversified, it’s probably not as bad."

Indeed, while manufacturers are some of the south suburbs’ biggest
companies, it’s easy to overstate their importance. Construction,
retail, health care and education also are major employers of Southland

Many people who live in the area commute to other parts of the region, where they work in a large variety of industries.

State Rep. Al Riley (D-Olympia Fields) said the south suburbs remain "a net exporter of talent."

Eastern communities suffer

East of I-57, the foreclosure problem is hard to ignore.

There, foreclosure proceedings were initiated against roughly one
in every 22 mortgageable properties in 2008, according to a study by
the Woodstock Institute, a Chicago-based think tank. The overall
foreclosure rate was double or even triple that of other areas.

In some places, there was one or more foreclosure filing on
virtually every block. And there were thousands of additional
foreclosure filings in previous years.

Eugene Edwards helps low-income south suburbanites facing
foreclosure from the South Holland office of the Legal Assistance
Foundation of Metropolitan Chicago.

He sees a range of problems, such as people with adjustable-rate
mortgages struggling to make higher payments, companies who promise to
help those with mortgage problems instead defrauding them and renters
in buildings in foreclosure facing eviction.

"The highest rates of predatory lending loans were made in the
south suburbs, and now the chickens are coming home to roost," Edwards
said. "The problem is acute."

Throughout the Southland, some 3,900 properties were foreclosed on
and went to auction last year. Nearly all of them found no buyer and
reverted to the lender.

How much President Barack Obama’s plan to help struggling
homeowners will help still isn’t clear to Woodstock Institute Vice
President Geoff Smith.

If banks participate fully in the program, "I think there’s a
chance that could lead to a stabilization or decline in foreclosure
rates," he said. "In lieu of that, I would expect them to go up."

East of I-57, first quarter foreclosure filings this year increased
less than in other suburban areas, but the total number was still
extremely high.

Even if rates stabilize this year, there could be some
neighborhoods where two to four homeowners face foreclosure or already
have lost their home on every block.

Foreclosure is, of course, a bitter blow for homeowners and a major
issue for lenders. An abandoned home also can drag down adjacent
property values and impose significant costs on local government if it
becomes dilapidated or a magnet for crime.

But things aren’t getting to that point everywhere.

Despite 155 foreclosure filings in Evergreen Park last year, Mayor
James Sexton said that extra checks on vacant properties by village
building inspectors have kept them from becoming significant problems.
There were 229 foreclosure filings in Matteson last year, but Mayor
Andre Ashmore said the impact largely has been limited to occasional
complaints from neighbors about relatively minor upkeep issues.

"It’s not at the point where we feel that it’s critical," Ashmore
said, although he worries the problem could get worse, as does Sexton.

Foreclosures and job losses may be concentrated in some areas, but
they can help drive down consumer spending elsewhere. In Tinley Park,
officials are budgeting for sales tax revenues to fall by $1.5 million
next fiscal year.

Survival mode

Among the big-ticket items people have stopped buying are
automobiles, with drastic consequences for local dealerships and

NB Coatings employs about 300 people in Lansing, painting plastic parts for numerous large auto companies.

"In the last quarter of last year, the bottom just dropped out,"
said Mike Halinski, director of operations. "This is the third
recession I’ve seen since I’ve been here, and this is probably the

Things are tough even for those manufacturers that don’t rely heavily on the auto industry.

Family owned Modern Drop Forge has been in Blue Island for 95 years and employs 350 people.

Rick Heim, who runs the company with his brother, says sales have
fallen more than 20 percent as demand has dried up for the parts they
supply for everything from snowmobiles to railroad cars.

"I think we’re in a stronger position than most because of our nonautomotive bias," he said.

But he still doesn’t expect sales to bounce back to previous levels for at least one to two years.

Pat Ormsby is president of Bimba Manufacturing, whose cylinders
help other companies to automate production. He said his company, which
employs 325 people in University Park, has experienced the biggest drop
in demand he can recall since 1980.

"We’re reducing expenditures," he said. "We’re in a survival mode."

Nathaniel Zimmer can be reached at or (708) 633-5994.

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