Wichita: Not So Far from Ground Zero

Joe Goodwin still has his $20-an-hour job building 737 parts at Boeing Co.'s (BA ) sprawling Wichita plant, but he's convinced that his days there are numbered. The 37-year-old production worker, along with the rest of the country, reacted with horror when the twin towers crumbled to the ground on Sept. 11. Now the reverberations of that awful day are shaking up this prosperous Midwestern city.

Although far removed from the physical devastation, Wichita, like so many other places around the country, must now brace itself for the economic aftershocks rippling out in every direction from ground zero. This former cattle town long ago grew into the city with the highest concentration of aircraft workers in the country. That strength, however, has suddenly turned into a huge liability. First, there was Boeing's decision to slash as many as 32,000 jobs by 2002. Now, the city is on edge, waiting to see how its economy will shake as a result, even as other aircraft makers also mull layoffs. Goodwin, for one, isn't optimistic. "Where else," he asks, "am I going to find a job that pays as much as Boeing?"

COLLATERAL DAMAGE. Probably nowhere, at least not in Wichita. Fully 81% of the city's manufacturing jobs--and 21% of the city's total employment--are tied directly to the aircraft and aerospace industries. Talk around the Boeing (BA ) plant has it that as many as 5,000, or 40%, of Boeing's 17,400 local workforce could be cut. The city's other 43,000 aircraft workers are also at risk. Its three other big aircraft employers, Cessna Aircraft, Raytheon (RTN ), and Bombardier Aerospace largely make corporate jets. But sales of those craft could fall as corporate profits tumble. Raytheon has already been laying off workers. And Bombardier has warned of coming cuts.

The many smaller local companies that supply parts and services to the big-name manufacturers will also be hard hit. D-J Engineering Inc., a maker of machined aircraft parts, relies on Boeing for much of its business. Should Boeing scale back operations significantly, D-J could be forced to cut as much as one-third of its 150-person workforce. The economy "is just going to get horrific in Wichita," says D-J Chief Financial Officer Ronald E. Hipp.

But the cutbacks won't just affect aircraft workers. All of the city's commerce, from the bars and restaurants to the barber shops and retail stores in the shopping plazas, will feel the slump. At Charlie's, a bar and popular lunch spot down the street from Boeing, business is already off 30% since the attacks. "In 17 years, I have never seen a decline like this," says owner Rusty Young, who wonders whether she will even be able to stay in business beyond November.

Elsewhere in the city, the economic mood is more like the calm before the storm. Many car dealers, retailers, and real estate agents say sales are holding up. In fact, Wichita's unemployment rate ticked down slightly in July, to 3.5%, well below the national average. That could change quickly, though: For every job lost at Boeing itself, two other local jobs eventually disappear, according to Wichita University Economist Janet F. Harrah.

About the only businesses looking forward to the impending gloom are the the pawn shops along seedy Oliver Street, which leads to the Boeing plant. Dale Martens, manager of Money Town Inc., expects revenues to surge by 10% to 15% as layoffs mount and unemployed workers pawn items for cash. Joe Goodwin isn't waiting. He's already looking to sell his set of free weights and one of his family's three motorcycles. That's not likely, though, to make much of a dent in their credit-card debt, let alone pay the bills or buy groceries. That's why the Goodwins, along with scores of other Wichita families, are bracing for a long, hard winter.

By Robert Berner in Wichita

    Before it's here, it's on the Bloomberg Terminal.