ANDERSON, Ind. | Fastened to the wall of a florist shop a block from where thousands of autoworkers once toiled is a black foil balloon splashed with musical notes and the words "Good Luck."

This central Indiana city -- once pulsing with 22,000 auto jobs and a dozen auto plants -- is hoping for some.

The last auto manufacturing job will disappear in July, ending a love affair between the city and the auto industry after nearly 100 years. Recruiting new businesses and diversifying the economy represent Anderson's future.

"It's going to be long and slow on the recovery here," said Troy Davis, owner of the Flower Hut. "It's better than it was. Five years ago, everybody was hemorrhaging."

Struggles of the U.S. auto industry have accelerated a drop in American union membership that is helping transform communities such as Anderson across the Midwest.

As foreign automakers eat away at the market share of their U.S. counterparts, unionized plants run by General Motors Corp., Ford Motor Co., DaimlerChrysler AG and their former parts operations have closed or downsized and some jobs have moved overseas.

Union membership in manufacturing has fallen 1.3 percentage points to 11.7 percent, the first time statistics have shown it at a lower rate than among the national work force. Membership in the UAW fell below 600,000 in 2005, from a peak of 1.5 million in the late 1970s.

"The auto market is getting beat up," said Jim Clark, president of the International Union of Electronics Workers/Communications Workers of America. The union represents most workers at auto-parts supplier Delphi Corp., which is reorganizing under bankruptcy protection. "It's the loss of jobs that creates the loss (of members)."

Alice Sanders, 50, took a buyout from Delphi in October after 10 years and received $140,000 in separation pay. She had no pension or health benefits, and eventually got a union job at Behr Thermal Products in Dayton at $10.90 an hour.

"It's going to be a lot harder," Sanders said. "The unions aren't what they -- they can't do what they used to do. If you're a regular worker with union backing, I don't feel it's any different (than being nonunion)."

Clark said he believes the future will be better for unions. Among the trends -- more cooperative union-management relations.

"They recognize that if either one of them kicks a hole in the bottom of the boat, everybody drowns," said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

UAW leaders in Toledo agreed three years ago to allow auto parts suppliers to take over work once done by union workers who built Jeep Wranglers. The deal saved about 800 jobs.

"Those were jobs that would have gone to Mexico," said UAW Ohio President Lloyd Mahaffey. "We have to work together to save the pie."

Ford spokesman Marcy Evans said the UAW has worked closely with the company over the past 18 months and helped forge agreements on buyouts, health care and plant efficiencies that have saved the company money.

GM spokesman Dan Flores said the unions have been working hard with management to make GM more competitive, but more needs to be done to structure the company for long-term profitability.

"Despite all we've done together, we're still not generating positive cash flow in our North American auto business," he said.

Communities have tried to change with the auto industry.

Kenosha, Wis., was rocked in 1988 when Chrysler closed a plant there, snuffing out 5,000 jobs.

City officials scrambled to diversify, luring smaller companies with the promise of low-cost power, reasonable land prices and proximity to Chicago. About 10,000 jobs have been added since the plant closed.

In the Flint, Mich., area, GM employed 82,000 workers in the late 1970s. Today, there are about 12,000 GM and Delphi jobs.

The city is focusing on repairing roads, reducing crime and eliminating blight in hopes of attracting new business. In the past four years, the city's budget has gone from a $28 million deficit to an $8.9 million surplus.

"We are on the rebound," said Mayor Donald Williamson.

In Anderson, there are bleak stretches of vacant land where bustling factories once stood. But shopping centers and restaurants crowd each other on the city's east side, and businesses proudly hang blue-and-white banners trumpeting the Super Bowl football champion Indianapolis Colts.

Officials have been working to replace the lost auto jobs -- conducting overseas trade missions, upgrading roads, creating a new business park and installing a fiber-optic system that can be used by data-intensive companies.

Mayor Kevin Smith points to 300 new jobs that will come with a Nestle plant to open next year. And he notes that from May 2005 to May 2006, 500 more jobs were created in the community than were lost, the first time job gains have outstripped losses in 10 years.

When times were booming in the auto industry, workers packed the Lemon Drop Restaurant, a diner that features a courtesy basket of lemon-drop candies next to the cash register and a model train that circles overhead on a track affixed to the wall.

Today, the lunch crowd is much more modest, although still enough for the business to keep going with hopes of better times.

"I don't think there is going to be a quick fix," said owner Bill Pitts. "But we're getting the groundwork laid for it."

Said Smith, the mayor: "You can't see the future by looking in the rearview mirror."