Closed Auto Parts Factory Has Town Considering Bankruptcy

The little city of Crab Orchard thought it had a gold mine when E-R-J Manufacturing came to town promising hundreds of jobs in 2004.

“It just never got off the ground,” said Mayor Bill Dyehouse.

The factory shut down in March. Now Crab Orchard, which loaned the factory $2 million to start up, is left with the bill and its mayor says the little town has no way of paying it back.

“ERJ, I'm gonna say was slick enough that they didn't have anything signed, the city signed everything,” said Dyehouse.

Now the city is considering bankruptcy.

“The city would continue to operate, just as it is now, It would just relieve you of those debts,” the mayor said.

A former employee says that ERJ closed because it stopped receiving contracts. And the slumping auto industry gets the blame.

City leaders will meet Thursday night to consider options, one being a higher property tax that is highly unpopular.

“When you get elderly people on a fixed income and you're going to tell them you're going to raise their taxes, 5 to 10%, it's going to put a crunch on them,” said resident Lonnie Pruitt.

“We got a population of 840, 21% of those are under the poverty line,” said Dyehouse.

Mayor Dyehouse wasn't in office when the city loaned the factory money. But now it's a mess he's left to clean up.

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