May 16--It's not as if it's ever a good time for a city built on manufacturing to lose its historic anchor.

The now-shuttered General Motors plant in Janesville was always a major employer -- right up to when all production ceased April 23 and the final 1,200-plus people lost their jobs. The oldest GM plant in North America, it was a storied, steady presence in town, local officials said, for nearly 100 years.

But city leaders have been preparing for this moment, they said, since at least the 1980s, when the GM plant employed 2,800 people.

That was already well down from its peak in the late 1970s, when close to 7,000 people worked there. Officials expected that number to continue dropping, as manufacturers everywhere increasingly reorganized and relocated to chase the cheapest labor dollar.

"There was a recognition that all industries were going global," said Doug Venable, the city's economic development director since 1987. "They have to be globally competitive to survive. We wanted to keep GM strong and keep them active here as long as we could, while diversifying our economy."

The city's largest employer now is Mercy Health System, a network of three hospitals and 63 clinics in southern Wisconsin and northern Illinois. The system employs 2,600 people at Mercy Hospital Janesville alone, and more than 1,000 others outside of Janesville.

"We are in a position to provide health-care services from birth to death and everything in between," vice president Rich Gruber said, noting the 240-bed Janesville hospital recently added a medical office building and a two-story parking garage, along with major equipment improvements in the radiology department.

Gruber noted that in 1979, the automotive sector made up about 17 percent of total jobs in Rock County, but only 5 percent or 6 percent about 30 years later.

"It's health care that grew during that same period of time," Gruber said. He estimated that annual revenues for Mercy Health System have increased from $33 million in 1989 to $375 million now. "That's provided some diversification. It certainly doesn't take away the impact of losing a GM, but it softens the blow."

Janesville's advantages

A city of some 63,000 residents, 40 miles southeast of Madison, Janesville has spent the past few decades nudging its economy toward new businesses and industries that capitalize on the city's assets, Venable said.

Those strengths include a well-trained, technically able work force, an advanced telecommunications and transportation network, and a significantly lower cost of living and lower cost for office space than some larger cities in the region.

"We have a good quality of life, an excellent education system, our location along the I-90-39 corridor and our close proximity to Chicago and Milwaukee and the Minneapolis/St. Paul area," Venable said. "If you are a company looking to serve the Midwest market, we think we have a lot to offer here."

But in March, as if to highlight the continuing challenge, Janesville posted the state's third-highest unemployment rate at 15.3 percent -- up from 5.5 percent last year and a reflection of both the national recession and local woes.

In addition to the GM plant closing, Janesville residents have seen at least 670 layoffs at auto-supplier companies over the past seven months, plus job cuts by other types of manufacturers, including 100 layoffs in March by Hufcor, a movable-wall manufacturer.

"The economic recession has been felt by many of our manufacturers," Venable said.