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Slow Road Back to Recovery for the RV Capital

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April 27, 2011 by   Leave a Comment

Editor’s Note: The following story comes from AFP, the global news agency.

Once idle factories are ringing again with the welcome sounds of motor homes being built, but Elkhart, Ind., seen as a bellwether for the US economy is still hurting nearly two years after the recession officially ended.

“We are just crawling out of this recession — I mean crawling. It seems like our finger nails are just down to the skin here,” said Elkhart County Commissioner Mike Yoder.

Elkhart is known as the recreational vehicle capital of the world and more than half the jobs in the area are in manufacturing — four times the national average.

That used to be a blessing for generations of workers who could land a reliable job at a decent wage with a steady hand, strong work ethic and an eighth grade education.

It became a curse when the RV industry was hit with the double whammy of a spike in gasoline prices and the credit crunch.

After fluctuating between 2% and 5% for most of the past 20 years, the unemployment rate in the Elkhart-Goshen area jumped to 9.4% in July 2008.

By March 2009 unemployment here hit a peak of 20.1% — double the national average and one of the highest in the country — as RV orders dried up amid the worst economic downturn since the Great Depression.

President Barack Obama visited this Midwestern town of 52,000 four times — twice as a candidate and twice as president — to highlight his economic policies.

Stimulus dollars poured into the area — to fix roads, sewers, an airport runway, the local theater — and Norwegian electric car company Think garnered national headlines when it picked Elkhart for a new plant.

Most importantly, RV orders started to pick up again.

After bottoming out at 166,000 units in 2009 with a retail value of $5.2 billion — less than half of the number sold in 2007 for $14.5 billion — RV shipments rose 46% to 242,300 in 2010 as dealers began to restock their lots.

Shipments are forecast to rise 8.6% this year to 263,100, but only if rising oil prices don’t once again put the brakes on demand for the gasoline-guzzling vacation homes and trailers.

If sales don’t pick up, dealers will send those shiny new RVs right back to the factories, leaving manufacturers on the hook for everything but what amounts to a restocking fee.

The frantic pace of work at Jayco Inc. — one of the biggest manufacturers left standing after an intense period of bankruptcies and consolidation — speaks to the company and the industry’s optimism.

Clinton Lehman slides a cabinet base into a small trailer and quickly drills it into place while a co-worker works on the roof.

Lehman, 30, was out of work for nine months before he was called back to Jayco.

“It was scary at first, but it was not so bad because I knew there were lots of other people in the same boat,” he said.

Things are worlds better now. The shop floor is busy. Most of the people he knows are working again. He doesn’t have to worry any more about how he’ll pay for his daughter’s clothes, or books, or dinner.

There’s a good future in the RV world, said Dave Eash, vice president for sales and marketing at Jayco.

Attendance has been great at recent trade shows and there’s a lot of pent-up demand in the market.

Millions of Baby Boomers are retiring and RVs are also attracting a growing number of younger people.

And the industry has slimmed down with leaner and more efficient operations.

“We’re very confident of where the industry is going,” Eash told AFP.

“People are looking for an affordable way to take a vacation, spend time with family and have a lot of fun.”

It’s not clear if there’s a good future for everyone in Elkhart.

The receptionist at the local unemployment office greeted most people who walked in on a recent sunny afternoon by name. Unlike the dilapidated shopping mall, the parking lot here was full.

While the unemployment rate here may be looking better these days — it was down to 11% in March — only about 6,000 of the 24,000 jobs lost in the downturn have come back.

Meanwhile, the official labor force has shrunk by 13,000 people — or about 13% of the 2007 average — because so many people have left town or simply given up.

Fred Clair, 38, has been out of work for more than 2 1/2 years. He lost his house to foreclosure and had to move in with his parents. He has no idea what he’d do without their help.

“They say everything’s getting better, but I don’t see it,” Clair told AFP after yet another visit to the unemployment office. “Most of the people I know are still looking.”

Clair’s unemployment benefits ran out in September. He managed to find a job in February, but was laid off 2 1/2 weeks later when that section of the RV plant closed. Since then, it’s just been one disappointment after another.

Getting Clair and the thousands of others like him back to work is going to be “really, really difficult,” warned county commissioner Yoder.

Employers are wary of hiring people who’ve been out of work for so long, especially if they’re over 50.

Despite a major retraining effort, Elkhart’s workforce is still not educated enough to attract employers in industries other than manufacturing. Yoder’s hope lies in the entrepreneurial spirit which led to Elkhart’s past prosperity.

“I know the dreams are out there and I know that in the last two years from an economic development standpoint we’ve planted a lot of seeds,” he said.

“We’re just waiting to see what grows.”

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