Union Tank Car

A drop in shipping demand has led to the layoff of 22 employees at Union Tank Car Co.'s facility at 939 Holland Road, a company spokesman said.

The layoff, 17 percent of the plant's 127-person workforce, was part of a larger layoff at three of the company's five maintenance and repair shops, Bruce Winslow, Union Tank Car spokesman in the company's Chicago headquarters, said on Friday.

Winslow said the economic downturn reduced the demand for shipping, which in turn reduced the demand for the maintenance and repair of railroad tank cars, which is done in shops such as the one on Holland Road. The layoffs, which occurred July 10, follow a June in which the unemployment rate in Ohio climbed to 11.1 percent, according to data released Friday by the Ohio Department of Job and Family Services. The U.S. unemployment figure for June was 9.5 percent, up from 9.4 percent in May.

The railroad industry-related sector was among the first parts of the economy to feel the downturn and will be among the last to recover, Winslow said.

"There was a time period that was busy with cars being repaired," he said. "Now, we have those ready to go, and we won't work on as many more until the economy turns around."

Union Tank Car in March reduced production and cut a combined 300 employees at its manufacturing plants in Alexandria, La., and Sheldon, Texas.

The transportation industry is among the most vulnerable segments of an economy, said Hassan Aly, an economics professor at The Ohio State University at Marion.

"This is one that will be put off like the consumer putting off the purchase of big items like cars, furniture, refrigerators," Aly said. "For industry this is very much the same type. It's the first to be put off, because they can do what is in existence and since there's less demand right now is an easy one to put aside."

Aly said talk of federal stimulus money earmarked for expansion of railroad in Ohio may help the railroad industry recover more quickly than it has in past recessions.

Union Tank Car on Holland Road has 83 hourly employees and 22 salary employees following the recent layoff, which consisted of hourly and salary workers, Winslow said.

"Pretty much like for every other company in America, there's a recession going on," Winslow said. "The recession hit the transportation area quite hard. There's reduced rail car loading so consequently there's not the need for rail cars that there was a year ago."

"There is good news," he said. "We know the industry's very cyclical, and it goes up and it goes down. We've been up for quite awhile. We look forward to the bottom of this trough."

He said, however, he couldn't estimate when the company would be able to bring back the laid-off workers.

"We'll call them back just as soon as the economy turns around," he said. "They're the best guys around, so we want them back. ... We expect the economy to have to go up again before we go back up."

Aly said the recession is in the second half of its second year, "so I'm imagining we are in the bottoming down, and the economy will pick up by next year. It's not going to be a huge pick-up. It'll be modest growth of 1 to 1 1/2 percent (gross domestic product). But at least we're going to pull out of this negative growth we have right now, and there are signs of some pick-up even in housing, definitely in the stock market. It's doing much better than before. It seems like things are moving in that direction."

Any such recovery would be a fragile one, he cautioned.

"It's definitely one that could go south if things happen," Aly said. "This is not a sure thing. Because if the government wasn't able to pull out of the market in a timely fashion and keeps restricting these companies they've taken a stake in, then things might not be easily recovering."

"It does depend a lot on the Federal Reserve and Treasury policies in the next six months or so, an appropriate time of pulling out and definitely an easing of the monetary policy to encourage people to buy housing and take loans for businesses. All of this is important right now."