Benton Harbor: Whirlpool seeks balance in southwest Michigan homes

The St. Joseph River divides Benton Harbor and St. Joseph. A natural free-flowing impediment between the haves and the have-nots. Rich and poor. White and black.

Existing in the gray space on both sides of the divide is Whirlpool Corp. The Benton Township-based appliance manufacturer, the largest in the U.S., faces tough decisions and tougher expectations as it participates in its own brand of socioeconomic engineering to buoy the region it calls home.

Benton Harbor is the poorest city in Michigan — per capita income is just $10,059, compared with the state average of $25,135 — and is in stark contrast with Whirlpool, which opened a new $68 million campus downtown. Whirlpool reported net income of $783 million on revenue of $20.9 billion in 2015.

Whirlpool also operates a technology center in St. Joseph — a city that's 89 percent white with a per capita income of $37,777 — and one in Benton Harbor, which is 89 percent black with upwards of 50 percent of its residents living in poverty.

After globalization claimed much of the manufacturing might in the region — Whirlpool closed nearly all of its manufacturing plants in the Benton Harbor area in the 1980s — the economic vibrancy of the region plummeted. Whirlpool's white-collar workers stayed in St. Joseph and its former manufacturing workers stayed in Benton Harbor. It closed its last Benton Harbor plant in 2011, eliminating 216 jobs.

"When we've seen a spotlight on Benton Harbor and the socioeconomic challenges that created tension, they say Whirlpool should just fix it,” said Jeff Noel, vice president of communications and public relations at Whirlpool. “We can't just fix everything, but we haven't shied away from the tension, and it has actually brought the community together and made it easier to get things accomplished.

"We have to make sure the community understands” the decision to close a factory. “If you’re in a smaller community, you have a spotlight on you, but we have to do the right thing for the company first to be strong in the community."

Noel said if the company chose to maintain its factories without considering global economic realities, it would have been more harmful to the community. He pointed to Newton, Iowa, and the Maytag Corp. Whirlpool acquired Maytag in 2006 for $1.7 billion and closed Maytag's Iowa headquarters and plant operations throughout the region and the southern U.S., consolidating them into Whirlpool's, including in Benton Harbor.

"Maytag hadn't been aggressive in going global, and we bought them ... ," Noel said. "That's just one example of a small community that's been more adversely impacted because the company didn't do the things it needed to grow. So, now, we employ more in Benton Harbor than we ever have."

Whirlpool opened its $68 million Riverview Campus in Benton Harbor in 2012, which houses its sales, finance and supply chain teams.

However, the lack of manufacturing operations in the city still stings its poor residents and former blue collar workforce, said Benton Harbor Mayor Marcus Muhammad.

"In a utopia, Whirlpool would open a manufacturing plant in the city ... where they had 1,200 or 1,000 assembly line jobs that would impact the day-to-day economy, fueling the mom-and-pop shops and decreasing the unemployment," said Muhammad, who was formerly Marcus Singer as a basketball star for Benton Harbor High School in the early 1990s and a DePaul University guard. "In reality, Whirlpool is the Moby Dick, the white whale in this community, so there can be unrealistic expectations for the company to do everything. My administration would like to strike a balance."

The already complex relationship between Benton Harbor and Whirlpool became even more muddied in 2010, when Gov. Jennifer Granholm declared a financial emergency in the city and put its operations under state control. Joe Harris, former CFO for the city of Detroit, was appointed as Benton Harbor's emergency manager before being replaced by Tony Saunders, current chief restructuring officer for Wayne County, in 2013. Saunders and the state relinquished control back to the city in March 2014.

Saunders did not return phone calls to discuss Benton Harbor under his oversight.

The appointment of an emergency manager coincided with Whirlpool's plans to reinvest in the region by consolidating operations into three campuses, including the construction of its Riverview Campus.

The project received approval of a 12-year, $3.8 million tax abatement from city commissioners only months after the arrival of the emergency manager in 2010. In return, Whirlpool offered a voluntary $3.8 million donation toward city services, such as public safety, Benton Harbor's Herald Palladium reported.

However, emergency manager Harris rerouted the funds from Whirlpool toward shoring up the Benton Harbor Police Department's pension fund, Muhammad said. Whirlpool's Riverview Campus won't pay city property taxes until 2024.
"If (Whirlpool) were paying taxes on all of their properties, that would feed the general fund and make the city itself more financially stable with more tax revenue to provide better city services," Muhammad said. "That's the picture if Benton Harbor were ... a real company town."

Harris also sold Benton Harbor's water lines that ran to Whirlpool's headquarters in Benton Township for $675,000, canceling an eight-year water contract between the city of Benton Harbor and Whirlpool. Whirlpool paid for the installation of the water lines in 1967 and donated the line to the city of Benton Harbor, The Herald Palladium reported.

"For the city of Benton Harbor, this is good news as we receive much-needed revenue as we work to get more financially stable," Harris said in a statement at the time. "This also eliminates maintenance responsibilities for the aging line from the city, which in all likelihood would be a costly endeavor that would be hard for us to absorb."

But Muhammad believes vacating that contract hurt the city's long-term viability.

"These kinds of moves hurt the city," Muhammad said. "Now Benton Township enjoys the contract we once had on (Whirlpool's) administrative building. The EM breached contracts we had with Whirlpool, and that was a bad move for our city; now we can't afford to upgrade our own water plant. That was an abuse of power, and the company had to look out after their interests and work with whoever is in government. I respect that, but that's a period, a very dark period, we're coming out of."

Outside of the consolidation into three campuses, Whirlpool, through its Whirlpool Foundation along with several other nonprofits, funded a $500 million resort development, which included high-end housing and a public 18-hole Jack Nicklaus-designed golf course, on land on the north side of Benton Harbor once inhabited by factories.

The project, called Harbor Shores, was designed to bring "social change to Benton Harbor," according to promotional videos for the project.

"The intermingling that shifts a culture, makes it more upwardly mobile and creates more striving-type sensibilities naturally occurs when you bring people of different races and classes together," Marcus Robinson, then-president of the Consortium for Community Development nonprofit that helped lead the effort, told The New York Times Magazine in 2011. "It creates a mentality of inclusion. This could be a model for African-American towns. I want to see this turned into a great place to live, work and play and have it be predominantly black. A great place to play golf, go to the beach, with great schools, a place that turns out scholars, athletes and artists. A place that's banging, as they say."

Median home prices have increased in Benton Harbor from $67,500 in April 2011 to $101,000 in March, according to real estate site Trulia Inc. — though much of that could be linked to the high-end, often $800,000-plus homes at the Harbor Shores development.

Noel said the project was designed to be sensitive to the blight of the surrounding community.

"Many urban redevelopment projects are seen as displacing poorer residents because new development does create change," Noel said. "The Harbor Shores project is as well designed a process to avoid gentrification as is possible. The project is intended to spur opportunity in and around the development area...Harbor Shores does not allow the construction of gated communities, and all developments have public bike and walking trails that run through them."

The 530-acre tract of land for the project was formerly occupied by shuttered manufacturing plants — more than 140,000 tons of solid waste was removed from the site, Noel said.

"The signs of physical change within Harbor Shores have helped to build momentum and with it a community spirit embodying a 'can do attitude,' " Noel said.

Whirlpool continues its own brand of socioeconomic engineering by creating diversity within the community of its predominantly white-collar workforce. Whirlpool employs roughly 4,000 in the Benton Harbor region, Noel said, 2,000 of whom have advanced degrees.

Whirlpool established a lesbian, gay, bisexual and transgender network and has achieved a perfect score for the past 13 years from the Human Rights Campaign's U.S. Corporate Equality Index — which measures how well corporations treat LGBT employees.

"In some respects, what we've done has been by design and happenstance," Noel said. "Our workforce has to reflect our customer base, and we've made a commitment to those values. We attract great employees, and they're helping shape this community. As a global leader, we have to not only be progressive, we need to be successful."

Muhammad said the community is at an advantage to have the multinational corporation within its borders, even if tension still exists.

"There's definitely mixed feelings, but people in the community have gone to college on Whirlpool checks. We have retirees getting Whirlpool pensions. That's a lot of good that's gone around," Muhammad said. "We don't want to live in the past as a community, and we're intrinsically linked to Whirlpool and are happy to have their presence ... but I haven't met one person that doesn't agree that we need a plant to provide jobs to this community. I would be the biggest cheerleader and would have a pair of scissors the size of Trump Tower to cut that ribbon (for a grand opening)."

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