In October 2017

Photography by Stacey Van Berkel

This story was updated in the third-to-last paragraph to clarify factors of Morehead Memorial Hospital’s financial problems and CEO Dana Weston’s relationship with the institution.

 

Like sunlight shining through the branches overhead, late-summer heat filters down to the Smith River. As Tar Heel streams go, it’s modest, ambling through the foothills to arrive at this seemingly wild setting. In reality, it’s a half-mile from Eden’s busiest street and its largest employer, Morehead Memorial Hospital.

Two years ago, volunteers helped create this trail where small butterflies flit in the damp morning air. What they built was intended to look good and to filter runoff into the river.

“We’re proud of our natural resources,” says Myla Barnhardt, in love with Eden since her family moved here some 30 years ago. The Smith empties into the Dan River about a mile downstream. “We made things we were proud of, too,” adds Barnhardt, whose late husband, Calvin, relocated in the 1980s for a human-resources position at Fieldcrest Cannon Inc. “We made beautiful towels that were so luxurious you could find them in the finest hotels in New York. But most of all, we’re proud of the hardworking people who live here.”

Some of the volunteers who made the trail worked at MillerCoors on the outskirts of town. Vernon Gammon, 64, started when the plant opened in 1978 as Miller Brewing Co. It became Eden’s signature industry after Fieldcrest, then owned by Pillowtex Corp., closed in 2003, continuing the decline of the city’s textile economy that once employed more than 4,000. Three years out of a recent five, it was the company’s brewery of the year; one year, its productivity and profitability made it the nation’s top manufacturing plant. “You pride yourself on your work,” Gammon says.

Chicago-based MillerCoors concluded that wasn’t enough. In September 2015, the beer-maker announced it was leaving, too. It then employed 520, averaging $60,000 a year or more, sharply higher than prevailing local wages.

Two years later, the 1.3 million-square-foot plant sits vacant, and Eden’s beer bust highlights the plight of scores of small towns.The middle class, once fueled by jobs such as these, is shriveling amid a widening gap between urban prosperity and rural decline. Some experts call the trend universal and irreversible. Others blame divisive politics. What’s undisputed is that the Edens of North Carolina are in trouble.

Nearly 50 of the state’s 100 counties lost population between 2010 and 2015, say demographers at the Carolina Population Center at UNC Chapel Hill. They’re concentrated in the eastern flatlands, but Piedmont communities such as Eden aren’t exempt. Farther west, in the mountains and valleys of the Blue Ridge, a half dozen counties are shrinking.

“All of the winds over the last couple of decades have been shifting toward the metros,” says N.C. State University economist Michael Walden. State demographers predict a fourth to a third of N.C. counties — all rural — will depopulate over the next several decades. From 2000 through 2016, Walden adds, “almost two-thirds of the job growth in North Carolina occurred in two metros, Raleigh and Charlotte. In unemployment rates, you see a big difference between rural and urban metros, too.”

While Charlotte and Raleigh populations each grew about 14% between 2010 and 2016, Eden lost 1% of its roughly 15,500 people, and neighbor Reidsville declined 3%. Overall, Rockingham County lost 1.5% as urban Wake County grew by 10.1% and adjoining Durham County, 8.7%.

In response to the widening division, North Carolina’s Republican leadership since 2011 has instituted a sweeping series of business and personal tax cuts, business and environmental deregulation, shifts in economic-development strategy and other business-friendly measures. North Carolina’s 3% corporate tax rate — it will drop to 2.5% by 2019 — is among the nation’s lowest. The state’s effective tax rate for so-called mature corporations is lower than all but four states, according to the Tax Foundation, a Washington, D.C., research group.

Just outside Eden, Phil Berger practices law and plots the state’s direction from a small, weathered brick cottage under shady oaks with a cracked sidewalk in front. A rural-urban gap? “There’s no question it exists,” says the Republican president pro tem of the N.C. Senate who is often called the state’s most powerful politician. It’s unfair to expect policies of the last seven years to correct inequities a century in the making, he says.

“The question would be, what have those efforts done so far as the overall economy is concerned, and I think the evidence is pretty clear,” Berger says. “The number of jobs created in North Carolina has gone up a great deal — about 500,000 is the number I see — and the unemployment rate has gone down, even in areas like Eden that have continued to struggle.

“Those policies addressed the overall, the macro of the economic situation in the state,” Berger says. “To try to look at a micro situation like the brewery and draw conclusions, that’s apples and oranges.”

Eden economic developer Mike Dougherty agrees. “The divide’s not just here,” he says. “Seventy-five percent of the jobs in this state are in 15 metropolitan areas, and more than 115 people a day are being added in Charlotte. I know. My son lives there.”

Others point fingers. “We’re in a downward spiral, and I believe that has a lot to do with Republican policy” on education funding and environmental regulation, says Roxanne Griffin, who owns a horse farm near Stokesdale and chairs the Rockingham County Democratic Party. Eden is recovering from Duke Energy Corp.’s coal-ash spill into the Dan River in 2014, which hasn’t helped the town’s effort to rebrand itself as an outdoor-adventure attraction.

“Rockingham County has an aging labor force. Our youth don’t have jobs here, and so they end up going elsewhere,” says Griffin, a former rider with the elite Lipizzaner Stallions troupe. “If they don’t see a need for getting an education and getting a job, you see a lot of dropouts, and we have a high dropout rate.”

Berger agrees on the results, not the reasons. “Young people who graduate from high school and go to college in larger and larger numbers tend not to come back,” he says. “They gravitate to the Raleighs, Charlottes and Durhams. We can’t claim any victories yet, but we are taking steps to address that.”

What’s certain is, two years after the loss of Miller-Coors, with the gap between town and country widening, the contradictions remain as striking as a wilderness trail in the heart of town.

Stacey Van Berkel

North Carolina has more than 500 municipalities, and two-thirds of its people live in those classified as urban. Rockingham County and its biggest town, Eden, exemplify the other third.

It’s Thursday lunchtime at Jerry’s Restaurant on Fieldcrest Road, in a neighborhood of updated mill houses, churches and small brick homes. “It’s broasted chicken. That’s with a ‘B’ not an ‘R,’” Diana Biggs, 59, tells newcomers inquiring about the menu. Husband Tim hickory-smokes another specialty, barbecue. The couple bought the restaurant 12 years ago.

Hulls of some of the early textile factories, including one of the six that industrialist Benjamin Mebane built here in the 1890s, watch vacantly over the Smith and nearby canals.

When Chicago department-store magnate Marshall Field bought out Mebane in 1912 and renamed the mills Fieldcrest, Eden’s role in Tar Heel textiles was sealed. By 1967, when Leaksville, Draper and Spray, each with its own mill, downtown and identity, put aside local rivalries and merged to form Eden, Rockingham County had a bustling textile economy.

“Small towns everywhere are not as well off as big cities, but people are more willing to stick together, to help each other,” Diana says. “People don’t have a lot, but they’re willing to give.”

Textiles still help sustain Eden. Montreal, Canada-based Gildan Activewear Inc., is spending more than $23 million to expand a 1.7 million-square-foot distribution center where it now employs more than 500, Dougherty says. “They’re the largest distributor of T-shirts in the country,” he says, measuring output in millions of dozens. Rug and carpet maker Kara-stan, a division of Calhoun, Ga.-based Mohawk Industries Inc., employs more than 200 and launched an $8 million expansion in 2015.

As early as the 1970s, though, concerns mounted that a concentration of industry in textiles and furniture foreshadowed trouble. More than in other states, Tar Heel plants set up in rural or semirural settings, close to eager, off-the-farm labor, raw materials and water, Walden says.

“Unlike my home state, Ohio, where most manufacturing jobs are in urban areas, in North Carolina, textiles, apparel and much of the furniture industry was rural,” he says. “So the decline of those industries has really hit rural areas more than urban ones.” Unionized plants such as MillerCoors and those in textiles and furniture propelled the middle class. No more.

“The middle class is downsizing to a far greater extent in North Carolina,” Walden says. Middle-class jobs, $45,000 to $69,000 a year, are up 6% nationwide since 2000 but down 5% in the state. High-wage employment above $70,000 in pharmaceuticals, finance and similar fields has increased 25% in North Carolina, triple the national rate, sparked by gains in Wake and Mecklenburg counties. When Miller chose Eden for its plant 39 years ago, state and local leaders cheered the diversification.

Vernon Gammon had grown up in Reidsville, and in 1978 was laid off by Lorillard Tobacco Co. in Greensboro before starting work at the brewery. “People came from furniture, textiles, tobacco, everything,” he says. “It was the best-paying job in the county, and probably the state.”

Gammon worked in packaging until 1991, when he was elected secretary-treasurer of Teamsters Local 391, which represented brewery workers. North Carolina is consistently one of the nation’s two least-unionized states, while the politics of Eden’s county, Rockingham County, are solidly conservative — Trump won 63% of the vote in 2016. But Miller, which was acquired by South African Breweries in 2002, avoided stoppages or strikes and touted the plant as its most profitable brewery. “For years,” Gammon says, “Miller was the only beer that had on its can, ‘Union Made.’”

Why MillerCoors left is still debated. The company says it had excess brewing capacity, but union leaders and area politicians contend that treaties such as the North American Free Trade Agreement have often turned North Carolina’s small-town industries into hapless global pawns.

It’s widely believed that MillerCoors in Eden was sacrificed to avoid antitrust action that would block Anheuser-Busch InBev’s purchase of SABMiller. It’s a complicated dealmaking tale, but the gist is that InBev, which has joint headquarters in Belgium and New York, paid $107 billion for London-based SABMiller last October. As part of the negotiations, SABMiller agreed to divest its Miller brands to Canada’s Molson Coors Brewing Co. Still, Anheuser-Busch, best known for making Budweiser, now has a 30% share of world beer sales, and 45% in the U.S.

At Jerry’s Restaurant, the issue is far from global. “We used to get the big wheels, the ones who could leave [the plant] for lunch,” Diana Biggs says. “Others would come by and get food on their way to work. Our restaurant delivers, so people at the guard house would call in their orders. That’s all been cut out. The J-Mart convenience store, the Railroad Café down here below us, everybody feels it. A lot had to relocate, and that took families out of here. That left empty houses.”

Stacey Van Berkel

In the summer twilight, at the Eden Drive-In, SUVs and pickup trucks crunch through the gates. Characters from tonight’s double-feature — costumed Minions from Despicable Me and Spider-Man from Spider-Man: Homecoming — delight youngsters.

Some wander to the concession stand for burgers, corn dogs and pizza. “We’re looking into deep-fried Oreos,” laughs Tim Robertson, whose family bought the closed drive-in in 1994 and renovated it. Mention MillerCoors, and he turns solemn.

“Look at just 10 or 15 years ago, and things have changed here,” he says. “Eden had a Putt-Putt, a bowling alley. All gone. We’ve lost pretty much all our retail business except Walmart. We’ve lost K-Mart, Roses. Eden Mall, there’s virtually nothing in it. We used to have a bookstore, a record store. There’s just not the revenue now to support them.” (An exception is his drive-in, which is doing fine.)

 

The massive MillerCoors plant sits idle on a 1,600-acre tract, seas of parking lots sprouting crabgrass in sunbaked cracks. Engineered to make up to 8.8 million barrels of beer a year, enormous stainless-steel tanks sit empty. Efforts to find a successor fuse political foes in a bipartisan front: Can Tar Heel public officials muscle a multinational corporate giant into reopening a plant or force it to sell to a competitor?

At City Hall, finance director Tammie McMichael struggles to balance a $24.4 million annual budget. The town no longer collects MillerCoors’ yearly half-million-dollar payment in lieu of annexation — the plant sits just outside city limits — or its $910,000 check for water and sewer service.

Following MillerCoors’ shutdown notice, Berger, Gov. Roy Cooper and Attorney General Josh Stein rallied with Teamsters members and others outside the plant. Berger says it was a rare rapprochement in politically divided North Carolina. Workers held signs directed at MillerCoors, “We produced for you, now produce for us by saving our jobs.”

Republicans who promoted deregulation now favor government intervention, an irony not lost on Berger. “There’s absolutely no reason why multinational conglomerates should force Eden’s state-of-the-art brewing facility to sit empty and rot away simply because they don’t want competition,” he says.

Though the merger was finalized, Stein and Berger have asked the U.S. Department of Justice and federal courts to review the transaction. “The brewery was shuttered as a result of the merger between MillerCoors and AB InBev,” Stein says. He wants the courts to link the sale of the brewery to a competitor as a merger condition. “If this were to happen, we could bring those jobs back. It’ll promote competition and benefit the local economy.”

If beermaking isn’t in the site’s future, Dougherty says the development’s 1,600 acres offer other possibilities, such as an industrial megasite. “We’ve been contacted by several developers, and last December, we had an open house and several came to look.”

Eden and Rockingham County are part of the Piedmont Triad Regional Partnership. Some rural members of industry-hunting groups complain that the Economic Development Partnership of North Carolina, established by former Gov. Pat McCrory and Republican lawmakers, favors cities.

“We’ve had three economic-development experts come here since 2011, and all say, if you’re going to survive, you have to do things regionally,” Dougherty says. “We try, and the Piedmont Triad Partnership used to be inclusive of the rural areas, but that’s not really the case anymore. So, we’re having to fend for ourselves.”

Eden is also looking north, to Virginia. The town and Rockingham County have run water and sewer lines across the state line to the Berry Hill Industrial Park where Atlanta-based Southern Co. is building a $250 million gas-turbine power plant. Twenty-eight percent of workers at Eden’s three largest industries commute from southside Virginia.

Losing MillerCoors hurt Eden’s biggest employer, Morehead Memorial Hospital. The 108-bed acute-care hospital opened in 1960, built partly with donations from Eden’s millworkers and others, says Myla Barnhardt, the marketing director. It also has a 121-bed nursing home in the rapidly aging county.

In July, after losing $2.5 million on revenue of $49 million for the first three quarters of its fiscal year, Morehead said it would reorganize under federal bankruptcy rules. It retains 700-plus employees but almost certainly will lose its autonomy to a larger system. Previous financial pressures prompted a management agreement in 2014 with Winston-Salem-based Novant Health, which has no financial obligation.

Morehead CEO Dana Weston says many factors caused the hospital’s troubles, including excessive debt related to building expansion and staff pensions, lower reimbursement rates and lawmakers’ refusal to expand Medicaid under the Affordable Care Act. Like many small-town hospitals, most already owned by big-city systems, more than half of Morehead’s patients lack insurance or are covered by Medicaid and Medicare, says Weston, a longtime Novant executive who became the independent hospital’s CEO in 2015. The two government health-insurance programs make up more than 60% of hospital revenue, she says.

For now, Eden and similar towns statewide face the harsh reality of the rural-urban gap.

“I love the back roads of Rockingham County, and you never knew when you’d round a curve and an elevation and see that big Miller sign on top of the plant rotating off in the distance,” Barnhardt says. “It gave you a sense of pride and comfort.” The sign no longer turns.

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