REPORT: CLOSINGS TO HAVE MINOR EFFECT ON COUNTY

A Southeast Missouri State University associate professor of economics says that recent closings of Brown Shoe Co. in Southeast Missouri will affect Cape Girardeau County slightly by slowing its economic growth rate.

Bruce Domazlicky recently designed an economic model of the regional economy to estimate the likely impact of the plant closings. He found that while the loss will be greatest in the home communities of the shoe facilities, Cape Girardeau County will feel a minor effect.

In August, Brown Shoe Co. announced that it would close four facilities in Fredericktown, Bernie, Charleston and Caruthersville due to foreign competition and recessionary economic times. About 1,300 jobs were expected to be lost. A warehouse facility in Caruthersville, scheduled to be shut down this month, will be the last to be closed.

"Clearly, this will have a significant, negative effect on the communities involved," Domazlicky said. "The loss of jobs means less income is being earned in those areas which translates into lower spending. This affects local businesses-retailers, wholesalers and service suppliers which leads to further job losses and reduced income in the affected communities."

None of the closed facilities were located in Cape Girardeau County. "But, there is likely to be some impact here as well," he said. "Cape Girardeau County is a major retailing, wholesaling and service center for Southeast Missouri. Some loss of business and, therefore, income is likely to occur here as a result of the plant closings."

Domazlicky designed his economic model with two parts one to represent Cape Girardeau County and the other to represent the outlying counties of Bollinger, Madison, Mississippi, New Madrid, Perry, Pemiscot, Scott and Stoddard. Since significant economic change takes time, Domazlicky said, the model was used to estimate the likely impact of the closings in 1994.

The model was first forecast assuming the plants were opened and then forecast with them closed.

He found that as a result of the plant closings, total employment in the outlying counties will be off about 3.05 percent and total output in the region will be down about 3.8 percent in 1994. Total personal income will drop by 2 percent and per capita personal income will be off 1.2 percent, Domazlicky said.

"In addition to the effects on the outlying counties, Cape Girardeau County will experience some negative changes as well," he said.

Total employment will be down by 208 jobs or .5 percent, total output will be off by $5 million or .5 percent, and total personal income also will be about .2 percent less in 1994, he said.

"These are not very large amounts relative to the size of Cape Girardeau County," Domazlicky said. "But they do illustrate the interdependencies and interrelationships that exist between economic regions."

Nonetheless, output, employment and income in Cape Girardeau County are expected to be substantially higher in 1994 than now, even after the plant closings, he said.

"The impact on Cape County is basically a very slightly lower rate of economic growth," he said. "Actually, worker layoffs are unlikely, but the job expansion rate will drop slightly."

Domazlicky says that the outlying counties will experience just slight output and employment growth between now and 1994.

Total production of goods and services will be up by 2.7 percent in 1994, whereas employment will grow by just .5 percent. Total personal income for the region will rise by 5.4 percent, he added.

"It is obvious that the outlying counties, and especially the communities where the plants are located, are being dealt a significant blow by the closings of Brown Shoe Co," he said.