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1986 Deals Second Economic Blow To Kokomo With AM-GM-Strike Shutdowns Bjt

November 20, 1986

KOKOMO, Ind. (AP) _ Kokomo’s economy has been dealt a one-two punch this year, with the closing of Continental Steel in February and this month’s strike at Delco Electronics, the city’s largest employer.

United Auto Workers Local 292 walked off the job at the electronic components and radio plant Monday in a dispute over subcontracting and the proposed move of some work to Mexico, idling 7,700 workers.

And by the second day of the strike at the General Motors Corp. subsidiary, layoffs occurred at related GM facilities in four other states.

″When Delco shuts down, the manufacturing sector in effect really gets shut down,″ said Dilip Pendse, an economics professor at Indiana University- Kokomo. ″In terms of Delco’s contribution to volume of business in Howard County, it accounts for nearly 70 percent of the manufacturing sector’s output.″

The closing of Continental Steel, which had employed about 1,000 people, cost the city $150,000 in local option income tax revenue per year and about $25 million in retail sales, said Pendse.

Rodney Padfield, a 21-year employee at Delco, said the walkout is bound to hurt the city eventually. ″It takes working people to pay the taxes,″ he said.

Bud Overfield, an electrician-troubleshooter who has worked 16 years at Delco, said, ″Nobody ever wants a strike. It’s a case where you either back the union or you don’t have a union.″

In part because of the Continental closing, local unemployment has moved from about 7 percent up to about 11 percent in September, officials said.

And the Delco strike could cost Kokomo about $67,000 a month in local option income tax, Pendse said. And Public Service Indiana, which Pendse says lost about $700,000 a month in electric bills when Continental Steel folded, also will feel the pinch.

Pendse estimated retailers will lose about $11 million in sales per month if the strike continues. Banks, savings and loans, state and federal government also will lose money eventually, he said. And GM will pay a high price in terms of falling behind the competition if the strike lasts long, Pendse said.

″It will take about a month and a half for the local economy to feel the impact. But if the strike continues in the month of December, then the cash registers are not going to ring loudly during Christmas time,″ he said.

For 1985, Kokomo’s average earnings per worker were the fourth-highest in the country, averaging $24,407 for all fields, Pendse said.

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