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‘RV Capital’ Looks Inside Itself for Recovery
Posted By RVBusiness On October 8, 2010 @ 11:11 am In Breaking News | No Comments
For 20 months now, Ed Neufeldt has kept the photograph in his wallet as a reminder of a promise made but not yet kept.
The small, scuffed print shows Neufeldt standing next to Barack Obama on Feb. 9, 2009, the day the U.S. president came to this recession-battered slice of the American heartland and assured its anxious residents the economy was soon going to improve, PrimeMedia News reported.
“One of the first things he said to me was, `I’m going to get you back to work,'” recalls Neufeldt, a 64-year-old father of seven. “But I really don’t think he helped me get back to work at all.”
Neufeldt makes this statement more out of disappointment than anger.
Like many other longtime residents in this county of 200,000, located about two hours east of Chicago, Neufeldt had been counting on Obama’s $787-billion stimulus bill to jolt the U.S. economy into recovery.
Known as the “RV Capital of the World,” Elkhart became a symbol of the Great Recession when its signature industry was slammed by a brutal combination of economic factors in 2008 – $4-a-gallon gasoline that sapped demand for gas-guzzling motorhomes, a consumer-credit squeeze and a collapse in Americans’ discretionary income.
The local unemployment rate shot to 18.9% in early 2009 from under 5% in 2007, turning Elkhart from one of the most prosperous industrial areas in the country to one of its most desperate.
“It was dire,” says Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County.
Neufeldt was among the recession’s earliest victims, laid off after 32 years working on the assembly line at Monaco Coach Corp., a maker of high-end recreational vehicles.
He received six weeks in severance pay and then turned to unemployment benefits to support his family.
In all, 1,400 workers lost their job at Monaco – one of several companies to close its doors or slash workforces.
The economic carnage in Elkhart caught Obama’s attention even before he was president. He visited the county twice as a candidate while courting voters in Indiana, a traditionally conservative state that he carried in the 2008 election.
Obama has visited twice more since entering the Oval Office, first to plead for the stimulus shortly after taking office and then again in August 2009 to announce a $39-million grant for the production of electric delivery trucks in the county.
But almost two years after passage of the stimulus, the economic recovery remains uneven in Elkhart — with signs of hope tempered by ongoing struggle.
The county’s jobless rate has fallen amid a welcome upswing in the RV industry and the arrival of some “green” manufacturing jobs. Even with the modest surge in economic activity, unemployment stood at 13.4% in August.
“Consumption has been pretty weak coming out of this recession. Consumers and households have decided to hunker down, and I think they will remain hunkered down for a while,” says Bill Witte, an associate professor in economics at Indiana University Bloomington.
“That will have an impact on discretionary expenditures, which include things like great big RVs.”
In Nappanee, a town of 6,700 in southern Elkhart County, street signs advertise a food drive to aid residents struggling to make ends meet.
“I don’t think the recession is anywhere near being over,” says Larry Thompson, Nappanee’s Republican mayor.
“Even those who got their jobs back, they might be getting those jobs back at $10 less an hour than what they were making, and maybe their spouse, husband or wife didn’t get their jobs back at all,” says Thompson.
Debate over whether the stimulus worked — or is working fast enough — has dominated the political conversation here ahead of next month’s congressional elections.
Just two years after Obama won Indiana, Democrats are at risk on Nov. 2 of losing the U.S. Senate seat being vacated by Evan Bayh.
According to a September poll by Rasmussen Reports, Republican Senate candidate Dan Coats is leading Democrat Brad Ellsworth by 16 points. In Indiana’s second congressional race — which includes part of Elkhart County — incumbent Democrat U.S. Joe Donnelly is in a close race against Jackie Walorski, a Tea Party favorite one local resident described as “Sarah Palin on steroids.”
“The stimulus is a hard sell to the guy that is unemployed,” acknowledges Democrat Dick Moore, mayor of the city of Elkhart.
“As people go back to work across the country, the first thing they are going to provide for is their needs. What we make here in Elkhart, Indiana, can be considered a want, not necessarily what you need. So we will lag a little bit.”
Still, Moore says the stimulus has provided a vital boost – launching infrastructure projects that are rejuvenating the city’s streets, schools, airport and municipal buildings.
He also credits Obama for raising Elkhart’s national profile – saying it has paid off by driving interest among entrepreneurs looking for a place to locate new businesses.
On a recent morning, the local newspaper reported a start-up recreational vehicle manufacturer was bringing 40 new jobs to Elkhart after receiving tax breaks from the local government.
Think, a Norwegian electric carmaker, has announced plans to begin North American production in 2011 in Elkhart, promising another 415 local jobs.
“We have been through a lot of these cyclical times with the RV industry. We have always survived,” says Moore.
Indeed, there have been other success stories.
Prime Time Manufacturing, a start-up company backed by investor Warren Buffett, has 125 employees and is producing three lines of recreational vehicles in facilities left vacant at the height of the recession.
Challenger Door, which supplies companies making RVs and transit buses, rose from the ashes of another failed firm. It has hired 120 workers in Nappanee.
“Three-quarters of the workers were actually from the old plant and out of work,” says Merlin Yoder, Challenger’s president.
Some local officials say new businesses are thriving despite the stimulus, not because of it. Other companies that sought stimulus funds are still waiting for the money to be released, says Heiden-Guss.
“This county, in particular, has gone around government in order to get things done. They are entrepreneurs,” she says.
Among some local businesspeople, there is grumbling about the administration’s decision to give $39 million in stimulus to Navistar, a large truck manufacturer that acquired Monaco Coach, the failed RV maker.
After Obama announced the money would be used for state-of-the-art “Made in America” electric trucks, it emerged that the first vehicles were largely assembled at a company factory in Coventry, England.
“It was a scam,” says Wilhelm Cashen, vice president of Livin’ Lite Recreational Vehicles LLC, a small local company that designs light camper trailers for Jeep.
“The government gave (Navistar) $40 million. They went to Europe and built the truck. They didn’t do anything here.”
Among critics of the stimulus, Neufeldt may be the most surprising. He gained national prominence after being asked to introduce Obama during his first presidential visit to Elkhart.
“I came away feeling he was really going to turn this country around,” Neufeldt says. He felt that way until about three months ago.
Still unable to find full-time work in the RV industry, Neufeldt now juggles three part-time jobs in the town of Wakarusa. He delivers bread to local stores, cleans the office at a local medical clinic and is helping Cashen with the launch of the company making Jeep trailers.
Neufeldt makes enough money to afford the $400-a-month premium to provide health insurance to his wife and two children who remain at home. But he can’t afford the extra $500 a month it would cost to obtain coverage for himself.
“It took me a year to get back to work. I didn’t get back in the RV industry. My first job, delivering bread, had nothing to do with the stimulus at all,” Neufeldt says, who recently attended a Tea Party rally headlined by anti-Obama broadcaster Glenn Beck.
“I think I just did it on my own.”
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