The Impacts of the H.D. Lee Plant Closure in Laclede County: Anna E. Kovalyova Morgan M. Mundell University of Missouri, Columbia

The Laclede County Scenario Project analyzes the overall impact of the H.D. Lee plant closure on a county economy. The project has been a collaborative effort between the County and the Community Policy Analysis Center, University of Missouri. The initial impact of the laid-off workers is introduced in year 2003, and is examined through The report compares the forecasts prior to and after the plant closure.

Laclede County is expected to continue its growth in a number of socio-demographic, economic and fiscal variables over the next ten years. However, this growth is smaller than it could have been if the County did not experience the loss of 750 jobs in 2003 due to the closure of H.D. Lee Company, Inc. Findings

This closure is expected to have the following adverse effects on the County: Growth over the baseline period would have stimulated demand for approximately 3,380 additional housing units. When considering the effect of plant closure, the demand for housing in Laclede County is expected to increase by 2,470 housing units over the 10 years of the projection which is just over 900 units less than in the baseline.

In the baseline (i.e., prior to the plant closure), employment by workplace is projected to increase at a rate of 2.3 percent per year through This growth would have added almost 4,600 jobs to the local economy over the next decade. However, with the closure of the H.D. Lee plant, the forecasted employment is projected to increase at a smaller rate of 1.7 percent per year through This means 1,200 less jobs than was expected without the plant closure.

The total decrease of 1,007 jobs in County employment in 2003 reflects both the direct loss of 750 jobs at the H.D. Lee plant and the additional 257 jobs through multiplier effects. With the plant closure, the number of unemployed in the County in 2003 increased by 90 percent over its baseline figure.

In the next two years, most of the laid-off people are expected to find another job or go though additional training. Still, some will remain unemployed, whereas others will retire, thus, leaving the labor force. Therefore, in the scenario the number of unemployed in Laclede County is expected to virtually return to its 2001 level by 2011.

In the baseline, the Laclede County total personal income was expected to grow at a real growth rate of 3.7 percent per year. When considering the effect of plant closure, total personal income is expected to grow at an annual rate of 3.0 percent leading to a growth of almost $50.3 million less than in the original baseline.

In the baseline, increased County income and employment were to fuel the strong growth in taxable retail sales – from $301.6 million in 2001 to almost $427 million in 2011 (in 2001 dollars). With the closure of the H.D. Lee plant, the County retail sales are expected to increase by about $95 million – $30 million less than is expected without the plant closure.

In the baseline, County property taxes and sales taxes were anticipated to grow at the respective annual rates of 3.8 and 3.1 percent over the next decade. This would have led to an increase of approximately $68,000 and $1 million for County property taxes and sales taxes, respectively over the baseline period.

After the plant closure, the forecasted tax revenues are projected to increase at slower rates of 3.1 and 2.1 percent per year through 2011 for property and sales taxes, respectively. This growth will lead to a cumulative loss of about $97K in property and approximately $2.4 million in sales tax revenues between 2001 and The increase in unemployment in the first 2 years after the H.D. Lee plant closure occurs could be used by the County as an excellent time in attracting new jobs.

This report examines current and future potential socio- demographic and economic conditions in Laclede County in two settings: if the H.D. Lee plant closure had not occurred in the county, vs. the consequences of the plant closure. The increase in unemployment in the first 2 years after the impact of the H.D. Lee plant closure occurs gives the County a great resource in attracting new jobs. Conclusions