The South Bend Tribune reported that Lippert will create up to 100 jobs in Middlebury and up to another 80 in Goshen by 2012. Along with a previously announced expansion in Elkhart, the company will have invested more than $9.3 million in Elkhart County, according to the Economic Development Corp. of Elkhart County.
In addition, Kinro products is adding another 30 jobs, Mark Brinson, community development director for Goshen, said, while retaining another 120. The company recently purchased Starquest Products.
But the good news hardly stops there.
On Tuesday night, the Goshen City Council took a step toward approving tax abatements for Benteler Automotive Inc. and GDC Corp., both of Goshen, which would help those companies expand.
Brinson said both abatements are expected to be finalized in two weeks.
When approved, Benteler Automotive will begin its first phase of expansion at a cost of $32.2 million, said Brinson, adding 98 jobs.
The company also has announced long-range plans to add another 80 jobs by 2016 and purchase $22.1 million in equipment while spending another $7 million on construction. Those 80 jobs aren’t even included in the nearly 400 new jobs announced this week.
Brinson also said GDC Corp. of Goshen, also known as Goshen Die Casting, has entered into a joint agreement with Monadnock Non-Woven of Pennsylvania.
It will take over an existing facility in Goshen, where it will spend $5.1 million for equipment and hire 73 people.
“It’s a perfect storm, and this time it’s a good storm,” Brinson said. “We’ve got a lot of good things happening.
“It’s amazing how much activity there is in the Goshen market, and it is fairly evenly split up between the automotive supplier business and the recreational vehicle supplier business.
“Those two are very active industry sectors at the moment.”
Brinson said the teamwork between the Indiana Economic Development Corp., the Economic Development Corp. of Elkhart County and the city of Goshen is paying off.
“They’re looking at where the best place is to do business, and it just so happens that we’re on the map as having a great cost of doing business and it’s working out great for Goshen,” Brinson said.
“It’s exactly what economic development is about,” said Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County. “We are excited to see they are existing businesses growing and expanding.”
Lippert Components, a manufacturer of recreational vehicle and manufactured housing components, plans to invest about $650,000 in new machinery and equipment as part of the expansion, according to the state’s release.
Kinro, a manufacturer of windows and doors for the recreational vehicle, manufactured housing and other industries, plans to invest about $3.5 million for the lease of a facility, and the purchase of machinery and equipment for the expanded production line.
“We are extremely pleased to continue to expand the operations of both Lippert Components and Kinro in Indiana,” said Jason Lippert, chairman and chief executive officer of Lippert Components and Kinro, in the release.
The company plans to begin filling the new manufacturing and administrative positions this fall. Lippert Components and Kinro currently operate 31 facilities in 12 states.
The Indiana Economic Development Corp. offered Lippert Components Manufacturing Inc. up to $1.55 million in performance-based tax credits and up to $165,000 in training grants based on the company’s job creation plans.
According to the release, Elkhart County and the city of Goshen will consider additional property tax abatement for Lippert at the request of the Economic Development Corp. of Elkhart County.
Even before these announcements, Elkhart County ranked third in the largest growth of gross domestic product in 2010, Brinson said.
“We all know we’ve had some rough spots in Elkhart County,” he said. “We’ve gotten a lot of attention as kind of being the poster child for unemployment, but the news lately is anything but that.
“We’ve become kind of the example of growth in manufacturing over the growth that has occurred over the last year,” he said.
Editor’s Note: Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County, recently issued the EDC’s year-end report for 2010. Excerpts from that report follow. For a copy of the entire report, contact the EDC at (574) 535-1002 or visit www.elkhartcountybiz.com.
This has been a very interesting year. Last year the EDC of Elkhart County was hearing from manufacturers they were increasing their expectations of growth by about 20%, but the EDC of Elkhart County is now hearing most of the companies are doing better. RV related suppliers have rebounded to about 50% of their pre-economic collapse levels. Non-RV related suppliers are performing nearly as well. Trends indicate 2011 and 2012 will be similar with regard to towable RVs and relatively flat in the transit and shuttle bus market. We are also hearing specialty vehicle manufacturing should increase rather dramatically.
Outside of the OEM RV cluster, our supplier chain manufacturers are struggling to staff up to meet increased demand for their products.
- Second shifts are not being filled.
- Overtime has greatly increased.
- Entry level positions are difficult to fill.
- Companies are holding off on capital investments and increases to their capacity.
Shuttle and Transit Buses
We have visited with many transit bus manufacturers and the supplier chain businesses supporting them. 70% of all shuttle buses and 85% of all transit buses are made in Elkhart County, so our conversations should be circling around how we can better support this component of our economy. Inbound raw materials and outbound bus logistics are two areas on which to start.
Logistics is becoming a constant talking point with our Elkhart County manufacturing base. The recession took out many of the independent trucking companies leaving gaping holes in our logistics network. The EDC of Elkhart County has been in discussions with the rail companies about reducing the cost of shipping, thereby closing some of these gaps.
We have a mass volume of traffic each week. As an example, just think of all the fifth-wheels, towables, transit buses, utility trucks, specialty vehicles, ambulances, utility trailers and boats we build each week. If we could somehow look at this market from a collective perspective and negotiate shipping rates on the combined volumes, we could have a major impact on operating costs for our manufacturers.
Elkhart County Market place Logistics Inquiries
The EDC had 66 inquiries in the first three quarters of 2010. The breakdown by industry was:
- Manufacturing, 58%.
- Unknown, 27%.
- Energy, 8%.
- Distribution/Warehouse, 3%.
- Food Processing, 2%.
- Information Technology, 2%.
- Agriculture, 2%.
All companies looking to expand or move to Elkhart County look at certain amenities of our location or building opportunities which they feel are critical to their business. The most common ones are listed.
- Docks, 28%.
- Rail, 25%.
- Toll Road/Highway, 25%.
- Cranes, 9%.
- High Capacity Electrical, 4%.
- Airport, 4%.
- High Capacity Floor Load, 3%.
- Foreign Trade Zone, 1%.
Processes moving back to U.S. from China, Asia, India and Mexico
We are seeing quite a bit of activity surrounding Elkhart County manufacturers wanting to move purchasing and processes back to the United States. What we are hearing is there are several good reasons to do this.
- Problems in the “just in time” concept are being realized. Too many suppliers were either severely damaged or eliminated altogether due to recent worldwide economic troubles. Inventory was stuck in transport. Cost of supplies rose and lead times lengthened. A new concept seems to be brewing, circling around some shared financial exposure and consideration for total cost vs. front end cost.
- Falling value of the dollar.
- Rising energy costs.
- Rising labor costs in traditional low-labor-rate countries.
- General fear of the instability in the Asian financial markets.
- Increasing capabilities and customization.
This move back is only an emerging trend, and only in certain industries; it is not widespread or universal.
There were 13 tax phase-in incentives made in Elkhart County in 2010.
Total new investment in the county was $96 million.
Total number of new full-time jobs was 1,765.
The county, once described as “the white-hot center of the national recession,” was named the top destination for corporate expansion among metropolitan areas with populations of less than 200,000 in 2009. It also earned Site Selection Magazine’s Governor’s Cup for the year.
“The EDC is currently working in partnership with existing businesses, the state of Indiana and utility companies for new and diversified investment opportunities,” said EDC President Dorinda Heiden-Guss.
Secretary of State Mitch Roob, the CEO of the Indiana Economic Development Corp., presented data about the state’s improving economic climate – with Elkhart County as a major contributor. The event was sponsored by Indiana Michigan Power and NIPSCO.
The honorees, the value of their investments and their products or services were:
- All American Group of Elkhart and Middlebury, which builds systems-built houses and specialty vehicles, $3.5 million.
- Dometic Corp. of Elkhart, which manufactures goods for the RV, truck, marine and hotel industries, $6.8 million.
- Dwyer Instruments of Wakarusa, which provides industrial controls such as gages, switches and transmitters, $505,000.
- InterCambio Express of Elkhart and Goshen, which provides the service of transferring money to Central American and South American countries, $700,000.
- izzy+, which makes furniture, $640,000.
- Kem Krest of Elkhart, which provides supply chain management solutions, $3.3 million.
- Navistar International Corp., which makes electric trucks at its Wakarusa plant, $39.2 million.
- Syndicate Systems Inc. of Middlebury, which makes household furniture, $460,000.
- THINK North America, which makes electric cars, $56.2 million.
- Truck Accessories Group of Elkhart, which makes fiberglass, plastic and aluminum components, $2.45 million.
In his presentation, Roob said job commitments in the state by early August had already climbed to 16,556, far above last year’s total 10,679 and a significant improvement over the pre-recession 14,956 in 2006. (See Chart.)
The number of projects was up to 115, compared to 89 for all last year, and investment was already at $2.74 billion, nearly three times the 2009 total. Wages from the IEDC projects are at the national average, far about the state average.
The growth was achieved with a modest cost to the state for expenses such as tax credits, training grants and infrastructure assistance.
Indiana is one of only nine states with the top rank from all three credit rating agencies and enjoys lower business tax and regulation than almost any other state, he noted.
Last year, Elkhart County was the location of 15 deals in the state – second only to the Indianapolis area, and including 3,512 job commitments more than any other county.
The Economic Development Corp. (EDC) of Elkhart County, Ind., recently honored Dometic among 10 companies for their commitment to leadership in the growth and prosperity of the local economy.
About 100 people were in attendance at the 2010 Investors Meeting during which the EDC identified and showed appreciation to the companies with congratulatory remarks and the presentation of crystal globe awards, according to a news release.
Keynote speaker Mitch Roob, CEO of the Indiana EDC, talked about Elkhart County’s impressive efforts to bring commerce to the area over the last year, and Dorinda Heiden-Guss, president of the Elkhart EDC, said companies working with them announced the investment of $245 million in 2009, resulting in 4,700 new jobs.
“We’re elated to have Dometic among our existing manufcaturers growing and expanding in Elkhart County,” said Heiden-Guss. “Dometic was our success story, as they surpassed their 10-year-goal their first year.”
Dometic promised 241 jobs between its Elkhart and LaGrange facilities but has created almost 400, just over 300 of those in Elkhart. Dometic was third highest in investment dollars among the companies honored at the meeting, spending $6.8 million in equipment and facilities.
“We were very honored to be recognized by the EDC,” said Doug Whyte, Dometic president. “We’ve moved factory operations here from overseas and constructed new facilities for product assembly and manufacturing because Elkhart is a great place to work and do business. This award is very meaningful to us.”
It looks like the nation’s largest bus dealership may have its eye set on a facility in Elkhart, Ind., according to The Goshen News.
The news was announced during a meeting of the Elkhart County Council Saturday (June 12), where officials with Chino, Calif.-based Creative Bus Sales Inc. indicated their desire to possibly locate one of their facilities in the Champlin Industrial Park on the southwest side of Elkhart.
The company plans to convert new buses, trucks, RVs and vans from gasoline to run on “green” CNG (compressed natural gas) and propane fuel systems. Should things go well with a proposed tax phase-in, future projects at the facility could include vehicle sales of buses, vans, alternative fuel buses and Global Electric Motors cars.
The company, which is also considering facilities in Michigan, Illinois and Kansas, came before the council to seek a five-year tax phase-in agreement that if approved could bring as many as 85 new full-time positions to the area by 2013. A final vote is set for July 10.
A tax phase-in is a partial or temporary exemption of a company from having to pay property taxes with the purpose of stimulating economic development.
According to Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County, Creative Bus Sales is currently planning on investing approximately $478,000 in new machinery, equipment, and computer/IT hardware and software into the facility which will then be used primarily as an alternative fuels conversion/upfit operation.
Referencing the job creation expected to occur through the proposed project, Bill Anderson, service and operations manager for Creative Bus Sales, indicated that of the 85 new full-time positions expected to be created, 30 to 35 positions will be filled immediately, with the remaining 50 to 55 positions being brought in over the next three years.
As for payroll contribution, Anderson indicated the company is planning on paying an average hourly wage of $15 without fringe benefits, bringing the total estimated annual payroll to approximately $2.65 million.
Anderson noted that Creative Bus Sales is a family owned business that got its start in California in 1980.
Since then, the company has evolved into the nation’s largest bus dealership with a net worth of $125 million and multiple facilities throughout the United States.
With a majority of its facilities located in the Western United States, Anderson said the company became extremely interested in Elkhart County due to its large pool of skilled, available workers.
“We want to tap into the area labor force,” Anderson said. “These are the people we want to get.”
While the company is currently targeting Elkhart County as its top choice for a new facility, Anderson said that securing the tax phase-in requested Saturday will be integral to the final site selection process.
“This tax incentive is very important to us,” Anderson said, noting that a final decision on site selection will most likely be made within the next 30 to 60 days.
Editor’s Note: On paper, the numbers add up to one thing: hope. Millions of dollars in new investment and thousands of new jobs were supposed to come in northern Indiana by the end of 2009 — many powered by Hoosier tax dollars. But, in mid-2010, many are nowhere to be found. WSBT-TV, the CBS affiliate in South Bend, Ind., took a closer look to find out why. Here are excerpts from the station’s in-depth report:
Hope was in the air as the ribbon was cut on 19 new northern Indiana companies in 2009. According to annual reports from Indiana’s Economic Development Corp., in the eight Indiana counties that comprise WSBT’s viewing area alone, those announcements represented more than $234 million in new investment from “competitive projects.”
An even bigger payoff?
The projects are listed as creating a total of 3,827 new jobs.
18 other companies across Northern Indiana are listed as investing $29 million in expansion, retention or training projects in 2009, creating an additional 1,312 new jobs and retaining 1,939 jobs.
It’s all part of $21.3 billion in new investment across Indiana listed by the state’s EDC since 2005 — including more than 100,000 new jobs statewide. From electric vehicles to food and furniture, the promises of new investment and new jobs they represented became a light at the end of a dark economic tunnel.
But, after weeks of research, WSBT discovered some of those jobs are nowhere to be found. We also found most of the companies in question have something else in common, too.
A Common Thread
It’s a term you’ve likely heard before, but it’s one that’s often misunderstood. Tax abatements are used extensively around the globe and right here at home. In 2009 alone, more than 20 local companies–from RV makers to steel mills, musical instrument manufacturers and electric vehicle developers — were offered millions of dollars in tax breaks in exchange for new investment and jobs.
Economic Development officials say, quite simply, it works.
“We call it, in Elkhart County, tax phase-in. It’s a tool that is used for existing as well as prospective new companies coming to the area for job creation,” said Economic Development Corp. of Elkhart County President Dorinda Heiden-Guss.
“A tax phase-in, or abatement, can be anywhere from one to ten years in term, and that may sound like a long time. But, if we aren’t doing it, someone else will. It’s highly competitive in economic development,” Guss continued.
There are plenty of local examples of how the process has worked to spur new investment.
In Elkhart County alone, EDC lists $189 million in new investment in 2009, and 4,235 new jobs — a higher number than in the previous seven years combined.
But, economic development officials admit — sometimes it can be tricky to turn those numbers from “commitment” to “reality.”
For example, Plymouth-based Electric Motors Corp. was promised about $250,000 from the state for worker re-training grants in exchange for new investment in Elkhart County, including the creation of 1,600 new jobs by 2012; 450 of those jobs were due to be created by end of 2010.
In January, then Interim CEO Ralph King said the company still intended to hire “several hundred people” to manufacture the vehicles beginning in May or June. But, as of early May, the company had instead vacated its former Wakarusa headquarters and downsized to a smaller location in Marshall County. (There was no new word, either, on its planned partnership with Nappanee-based Gulf Stream Coach Inc.)
Following the layoffs of four employees in November — about one-third of the company’s workforce at the time — only a small handful of employees remain.
It’s not a typical situation, Heiden-Guss said, but it does happen.
“There’s a certain amount of risk, I would say, with that. You’re going to believe somebody. You want to believe. But, you’re also going to do your due diligence as an Economic Development Corporation. You cannot control the enterprise system. It’s just not possible. But, each project is a case by case,” she said.
But, WSBT’s research shows those cases appear to be growing.
According to a search of archive records, Goshen, Ind., based Keystone RV Co. accepted $400,000 in state and local tax breaks for a new facility and new jobs in LaGrange in 2006. As sales surged the following year, the abatements promised appeared to be paying immediate dividends.
But, by early 2009, as the entire RV industry struggled to stay afloat, the company had laid off 265 workers at several facilities.
In New Carlisle, steel maker I/N Tek I/N Kote announced a major expansion in 2008, bringing 100 new jobs by 2010. United Auto Workers union representatives hailed the expansion as a major step toward a more stable future for local workers, and town leaders quickly approved tax breaks for the company.
But, in early 2010, company officials announced all construction on the addition was placed on an “indefinite” hold, as steel prices soared and profits dropped.
In Elkhart, Accubilt promised 33 new jobs and a $1.8 million dollar expansion when it accepted state and local tax breaks in 2006. At the time, city council members touted the announcement as “another positive sign” that Elkhart was a “city on the move.”
But, three years later, Accubilt laid off 73 workers. In late March, the company itself was on the move, closing the doors of its Elkhart facility for the last time.
And, these aren’t isolated examples. In fact, according to WSBT’s research, in many cases, tax abatement and job commitment haven’t exactly gone hand-in-hand. It’s one reason county leaders say they try to get as much information as possible before rolling out the red carpet for companies.
“You tend to question the large numbers,” said Heiden-Guss. “You’d love to see the 1,300 jobs and all the excitement and what-not. But, you don’t want to give false promises either.”
Heiden-Guss called it an “economic roll of the dice,” but one that’s “controlled”–particularly for taxpayers.
“Those companies that don’t meet those objectives or that haven’t completed their process will not receive benefits. The part where the taxpayer loses out is that those jobs that were promised don’t come to fruition. But, if the company did not meet those objectives, they are denied–do not receive–the incentive,” she said.
“I believe in accountability, and I think you’re going to find the elected leadership does too. They know firsthand that they need to be held accountable,” Heiden-Guss continued.
It’s a sentiment echoed by Elkhart County Commissioner Mike Yoder.
“Our county initiated [tax phase-ins] as a way to attract advanced technology companies–companies that would do something to diversify our economy. It’s a very important tool, because we have to come up with some sort of incentive locally to trigger the other incentives that the state kicks in. And, if we’re not offering those incentives, we’re not going to be competitive with other communities,” said Yoder, (R-Middlebury).
Elkhart County, Yoder added, has faced intense competition to land new investment.
“We’ve gone up against San Antonio, Texas, for example, that was literally just giving buildings away,” he said.
It’s one reason why Yoder says the county has felt it important to “roll the dice” on tax phase-ins. And, he says, in every case, taxpayers have virtually no risk.
“We want to see companies fulfill their commitments. But, if they don’t, we’re really not out anything, because, they wouldn’t have been here anyway. These are taxes we wouldn’t have had if the company had gone somewhere else,” Yoder said.
“There are some risks involved, no doubt,” said Indiana University-South Bend Economics Professor Dr. Grant Black. “Perhaps you do some infrastructure increases. Perhaps you give some tax breaks. And, just the way the markets work, the businesses might not pan out like they had intended.”
“Those are things that are really, usually out of anyone’s control. So, perhaps you don’t reap as strong of a benefit as you had predicted. And, there is a chance that, when you weigh your costs and benefits in the end, sometimes you may come up hurt a little bit,” Black continued.
Still, Black says there are many levels of mitigation aimed at controlling that risk, and protecting taxpayer money in the process.
“A lot of abatements have very strict guidelines that include requirements for companies to comply with. It’s not just a guaranteed reduction or elimination of taxes during that time period. If you don’t comply with the specified terms, you would then owe back taxes, for example,” Black said.
It’s why Black says it’s important for taxpayers not to count on investment until it actually happens.
“The time it takes these things to go into play is often a lot longer than people probably imagine. A lot of times we hear the big hoopla on the news and the big announcements. But, when you hear these announcements about creating lots of jobs, you really need to be aware that’s likely going to take some time, and is contingent on a lot of other economic factors,” Black said.
That could be one major reason for the increasing amount of promised jobs and investment that haven’t come to fruition.
“Some of that slowdown is likely due to the sluggish economy,” Black said. “And, even if that changes, ramping up operations could take some time. I don’t think you’re going to see that change overnight.”
In response to a recent investigation by an Indianapolis television station, Indiana’s Economic Development Corp. updated its 2009 annual report, listing for the first time the number of announced projects that never came to fruition at 13 percent statewide last year.
It’s also important to point out that many announcement projects do succeed even beyond expectations.
But, there are protections in place for those that don’t.
St. Joseph County recently passed a “tax abatement ordinance,” outlining which companies can receive tax breaks, and for how long. Elkhart County, and many other local counties, also have a review process in place to determine if companies are holding up their end of the bargain when it comes to investment and job creation.
If that doesn’t turn out to be the case, many counties have “claw-back provisions” aimed at guaranteeing at least a portion of money given for tax breaks is returned if a company doesn’t fulfill its commitments.
The goal now, Yoder says, is to increase the number that do live up to expectations.
“We want to see success,” he said. “And, it may take 5 or 6 — maybe 10 years to realize. But, we’re starting to see the change we want to see. We just need to be patient.”
Battered by the recession, there’s more news that Elkhart, Ind., is on the mend, according to the South Bend Tribune.
Heartland Recreational Vehicles LLC, a manufacturer of RVs and travel trailers, said late Monday (March 28) it will expand its operations in Elkhart, creating up to 265 new jobs by 2013.
The announcement came in a press release from the Indiana Economic Development Corp.
Heartland Recreational Vehicles, which manufactures fifth-wheel, lightweight and extended-stay RVs, will invest more than $2.6 million to purchase and equip a 125,000-square-foot manufacturing plant, according to the release.
Heartland announced in February that it purchased the remaining trademarks of the towable brands of Fleetwood Enterprises, which filed for bankruptcy protection in 2009.
Heartland Recreational Vehicles, which employs 1,050 people in Elkhart County, plans to begin hiring additional manufacturing and supervisory personnel immediately as the new product lines are phased in.
The acquisition of the former Fleetwood brands will allow Heartland to expand into markets in the western United States.
“Our ability to gain ground in a down market has clearly positioned Heartland to make tremendous market share gains and further grow our dealer body in 2010,” Brian Brady, president and CEO of Heartland Recreational Vehicles, said in the release. “This is shaping up to be the best year in our history.”
Founded in 2003 as a manufacturer of high-end fifth wheel recreational vehicles, Heartland RV has expanded into the mid-profile, lightweight and travel trailer markets. In 2006, the company broke ground on its current 110,000 square-foot Elkhart headquarters.
The Indiana Economic Development Corp. offered Heartland RV up to $885,000 in performance-based tax credits based on the company’s job creation plans.
The city of Elkhart will provide additional property tax abatement at the request of the Economic Development Corp. of Elkhart County.
The abatement amounts to a five-year property tax phase-in, for real and personal property, said Barkley Garrett, economic development manager for the city of Elkhart.
With the phase-in, they will not pay 100% taxes on real and personal property until year six, Garrett said.
The company has committed the 265 additional jobs by mid-2013.
It is not known if those are part of the 400 additional jobs announced in November. Company officials did not return calls to the Tribune.
“It’s a company that has weathered the storm very well,” said Garrett. “They have not been around very long but considering how long they have been around, they are a significant employer.
“They have 1,050 jobs here in Elkhart County, so they are a major player in the city and Elkhart County and also in the RV industry.
“They are a company we certainly want to see stay here and grow here.”
The tax phase-in is expected to get final formal approval at the April 19 city council meeting, Garrett said.
“It’s a good step for Elkhart and Elkhart County,” Garrett added. “We need to take care of our existing companies.”
Elkhart County, Ind., which remains the hub of the RV industry despite the industry downturn, was the top destination for new corporate investment in 2009 among metropolitan areas with populations less than 200,000, according to data tracked in Conway Data Inc.’s New Plant Database.
In the state category, Ohio ranked first for the fourth straight year and Indiana ranked 10th.
Conway Data published the 2009 results to its annual Governor’s Cup awards in Site Selection, a corporate real estate and economic development magazine.
Elkhart County was credited with 17 major investment projects in 2009 to lead the small metro area list. The greater New York City area led all areas with 215 investments. Dayton, Ohio, led the areas of between 200,000 and 1 million population with 46 major investments.
“Elkhart is once again in the national spotlight, but this time as a top location for new business investment last year,” said Mitch Roob, secretary of commerce and CEO of the Indiana Economic Development Corp (IEDC), in a news release. “Indiana’s low-cost business environment is a key differentiator that has attracted many companies to our state in the midst of a competitive economy.”
Governor’s Cup winners are selected based on the number of new corporate location projects in each state and metropolitan area that meet at least one of three criteria:
- Involve a capital investment of at least $1 million.
- Create at least 50 new jobs.
- Add at least 20,000 square feet of new floor area.
“The Governor’s Cup Award is a true honor for Elkhart County. The economic crisis has positioned us on the forefront of national and international news. This award is known to be a leading indicator of future growth and prosperity for a region,” said Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County.
Site Selection, a 56-year-old Atlanta-based magazine, has conducted the Governor’s Cup annually since 1978. The full report can be found at www.siteselection.com.
Created by Gov. Mitch Daniels in 2005 to replace the former Department of Commerce, the IEDC is governed by a 12-member board chaired by Daniels. For more information about IEDC, visit www.iedc.in.gov.
The Economic Development Corp. of Elkhart County (EDC) is reporting significant signs of recovery.
This economically challenged region of northern Indiana brought into the national spotlight briefly as the center of the recession is working together to establish an impressive comeback, according to an EDC news release. This economic resurgence is marked with over $105 million of new investment and approximately 2,600 new jobs that are to be created.
“The variety of economic activity we are seeing is extremely positive,” said Dorinda Heiden-Guss, EDC president. “Our existing industries are adapting and retooling operations during these tough times. The result is we are seeing manufacturing diversification into refrigeration products, commercial furniture, and new ‘green’ industries such as hybrid engines and lightweight composites.”
Heiden-Guss said existing companies in the truck and RV segment are now “leaner and greener” capitalizing on high energy costs in the marketplace with lighter weight, more fuel efficient offerings.
Among the RV-related expansions were projects announced, though not necessarily completed, by ATC Trailer Holdings Inc., Atwood Mobile Products, Coachmen Industries Inc., Dometic Corp., Dutchmen Manufacturing Inc., Electric Motors Corp., Gulf Stream Coach Inc., Keystone RV Co. and Robert Weed Plywood.
National and international exposure brought high interest from a myriad of entrepreneurs ready to launch companies and those considering green business expansion opportunities. “Companies looking for a winning location for expansion in need of an experienced manufacturing workforce, a variety of affordable space for lease or purchase, and educational institutions ramped up to handle industry specific training, should take a closer look at Elkhart County, Indiana. This is the highest level of interest the EDC of Elkhart County ever experienced,” she said.
As the manufacturing center for the region, Elkhart County businesses are ideally suited to adapt to market trends through customizing products and diversifying quickly. Many industry expansion inquiries align with the national trend of the burgeoning green industry, new energy and life sciences. As the primary contact for existing business expansion and business recruitment, Dave Ogle, director of business retention and expansion for the EDC, said he continues to see opportunity for economic growth.
“These are industries that will provide us with the diversification we must have for our future economic stability,” he said. “The fact that many of these green and other industries locating here will help our existing recreational vehicle and specialty truck clusters is a great advantage. These companies will provide our existing firms with new fuel efficient hybrid engines, lightweight sustainable composite technologies and other technologies to provide a competitive edge in the marketplace for our existing industries.”
George Graber was unemployed for three months this year after the shutdown of an RV plant in Elkhart County, Ind. Now, he’s building $15,000 travel trailers at startup Heritage One RV Inc.
His job-hunting luck reflects a rebound in RV demand that may signal the end of the worst U.S. recession since World War II. In the last four domestic cycles, Winnebago Industries Inc. and other RV makers foreshadowed the economy’s decline and heralded its recovery, government and trade-group data show, according to Bloomberg.com.
“The RV industry is always the first in and the first out, and there’s already been a noticeable beginning of it coming out of the current recession,” said Dave Hoefer, 66, an adviser to Earthbound Recreational Vehicles, which was founded this year on the site of another bankrupt maker in Middlebury, Ind.
Elkhart County builds more than half the RVs sold in the U.S., making it the center of a $14 billion domestic market. Evidence of a turnaround is showing up in new companies like Heritage One sprouting from the remains of failed manufacturers, and in no-vacancy signs at a motel favored by RV-hauling truckers.
Analysts watch RV sales because motorhomes and travel trailers are discretionary purchases that consumers defer in an economic slump. Industrywide deliveries may rise in 2010 to end a three-year decline, said Richard Curtin, director of consumer surveys at the University of Michigan.
Sales in July, the latest available, ran at the strongest annual rate since October, according to the Recreation Vehicle Industry Association (RVIA). By year’s end, those shipments should show their first monthly gain since October 2007, predating the onset of the recession in December of that year, said Curtin, who analyzes data for the Reston, Va.-based trade group.
Rise and Fall
Wholesale deliveries to dealers averaged 355,000 over a six-year period that ended in 2007, then tumbled to 237,000 last year as the recession took hold, according to RVIA data.
Showroom visits and consumer-loan approvals now are rising for the first time in more than a year, said Steve Smith, a Heritage One partner who recently drove 5,000 miles through the Midwest and South as part of a company sales call.
“Customers’ interest is obviously rising, which is making the dealers feel better,” Smith, 47, said from the 30,000-square-foot building in Nappanee, Indiana, where Graber and about a dozen other workers were assembling so-called “stick and tin” trailers of metal sheets over wooden frames.
Three Obama Visits
Elkhart County needs that kind of news. Located along the Michigan border and home to about 200,000 people, the county has a jobless rate of about 17%, the worst in Indiana. President Barack Obama has visited the area three times to talk about economic hardship.
Ron Muhlenkamp, whose Muhlenkamp & Co. in Wexford, Pa., has invested in RV makers coming out of past recessions, said he isn’t yet buying the stocks in this cycle.
“We think the consumer might be slower to return this time,” he said. U.S. joblessness reached a 26-year high of 9.7% in August, the Labor Department said on Sept. 4. The so-called underemployment rate, which includes part-timers who would prefer full-time work and job seekers who have stopped looking, rose to a record 16.8%.
Before coming to Heritage One, Smith worked at Travel Supreme Inc., a maker of $160,000 trailers that shut its plants in January after another company bought out the operations. Nearby sit two vacant buildings owned by motorhome maker Monaco Coach Corp., which went bankrupt in March.
Betting on Recovery
Earthbound, the company advised by Hoefer, is on the site of Pilgrim International Inc., which went out of business in September 2008. Earthbound has been working on $42,000 lightweight trailers since January and is betting on a recovery in time for a sales push in early 2010. Heavier trailers cut fuel economy for their tow vehicles.
“We feel the industry has a strong future,” said Bill Hughes, 58, an Earthbound investor who was a Pilgrim vice president of service and parts. In the past year, 15 new RV makers have begun operations, according to the RVIA.
Another sign of recovery is bookings at the Red Roof Inn in Elkhart, said General Manager Beth Ronzone, a 24-year employee. The motel is filled again on some nights with truck drivers who move RVs, a reminder of the industry heyday two years ago when rooms were sold out five or six times a week.
‘Seeing a Pickup’
“We started seeing a pickup in late April,” Ronzone, 57, said Aug. 24. By that evening, most of the parking lot was occupied.
Hiring is starting to pick up, too, said Dorinda Heiden-Guss, president of the Economic Development Corp. of Elkhart County
Keystone RV Co., a Goshen-based unit of Thor Industries Inc., the largest U.S. RV maker, announced last month it will add 200 workers to expand travel-trailer output, Heiden-Guss said. Jayco, in nearby Middlebury, is also recruiting, she said.
Among the investors betting on the industry is Warren Buffett’s Berkshire Hathaway Inc. Berkshire’s Forest River Inc. RV unit paid about $42 million for the RV business of Elkhart- based Coachmen Industries Inc. American Industrial Partners bought the motorhome unit of bankrupt Fleetwood Enterprises Inc. of Riverside, Calif., in June for $53 million.
Winnebago and Jackson Center, Ohio-based Thor are the only large, publicly traded RV makers still in the business and not in court protection.
Shares of Forest City, Iowa-based Winnebago and Thor have almost doubled this year. Since the recession began, Winnebago has tumbled 45% and Thor has fallen 26%, compared with a 31% decline in the Standard & Poor’s 500 Index. Coachmen still operates its bus and manufactured-home business.
At Sierra Motor Corp., a 22-year-old maker of interiors for horse trailers, 2008’s record-high fuel prices helped spur expansion into human transport.
The Bristol, Ind.-based company added a line of travel trailers weighing less than 1,750 pounds. They include amenities such as toilets, which aren’t common on models that small, President Michael Greene said.
That move also meant that Sierra Motor, which has about 45 workers, could keep about a dozen employees who would have been laid off as orders for equine vehicles flagged, Greene said. The labor force has exceeded 100 in busier times, he said.
“They are like family, you hate to have to let people go,” said Greene, 52, who was one of the company founders.
For Graber, 45, who had to sell his pickup for a cheaper model and take other belt-tightening steps after losing his purchasing job at Travel Supreme, the Elkhart recovery can’t come fast enough.
“People I know personally, a couple of them will get back every week now,” he said. “Three months ago, everyone was just down and they weren’t even taking applications.”