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‘RV Capital’ Looks Inside Itself for Recovery

October 8, 2010 by · Leave a Comment 

Ed Neufeldt introduces President Obama during his visit to Elkhart, Ind in February 2009.

Ed Neufeldt introduces President Obama during his visit to Elkhart, Ind in February 2009.

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.”

Elkhart Mayor Dick Moore (right) chats with Mike Huckabee during Huckabee's visit to Elkhart in the spring of 2009.

Elkhart Mayor Dick Moore (right) chats with Mike Huckabee during Huckabee's visit to Elkhart in the spring of 2009.

“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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BBC Blogger Offers His Take on RVs, U.S.

April 29, 2009 by · 1 Comment 

Editor’s Note: Paul Mason, economics editor for the BBC’s “Newsnight,” filed this blog from the U.S., updating his audience on the RV industry and President Obama’s economic stimulus package.

When Barack Obama came to Elkhart, Ind., in February it was Ed Neufeldt who introduced him. “We want to work,” Ed told Obama, who embraced him warmly.

The big, genial 62-year old used to build the motor caravans Americans call RVs, and Elkhart is the capital of the RV industry. But when credit dried up, the RV industry collapsed. Ed’s been out of work since September, after 32 years in the industry – 27 of them without a single day’s sickness, he tells me proudly.

Back then, in February, Obama’s main problem seemed to be the Congressional Republicans, who were blocking and tinkering with his fiscal stimulus bill. Now things seem more complicated. The fiscal stimulus is taking a long time to kick in, and the very principle of it is deeply resented by men like Ed, even though he will benefit from it in unemployment pay and health insurance payments.

100 days into the Obama presidency I found Ed and his former colleagues hard at work building timber-frame homes for homeless families. It’s a church-run project – they work for nothing. What they share with Obama, these men, is a deep religious faith. On almost everything else their attitudes reveal that this is not really Obama country.

“We want them to get out of the way and let us work,” one tells me. Them being the government. “We don’t want to be construction workers: what are we going to do? Be the man that holds the sign saying stop-go? We’re not trained for anything else!”

To these men – as for many Republican politicians – spending taxpayers’ money to get out of a recession seems wrong on principle. In Indiana the Republican governor has at least taken it – others, Sarah Palin included, have refused the money. But if it’s to be spent at all they would have preferred it as tax cuts or simple cash giveaways. What the Elkhart men want is for Americans to start buying RVs again, not for the government to put them to work on building roads.

Of course that is only half the story of America; as we found out in the election it is, precisely, just under half. The other half of America bought the argument that state intervention, an end to “trickle-down” economics could put the country right. But even in this demographic there is trouble.

A few days after I visited Elkhart I found myself being pinned against the walls at a trendy book publishing party in Brooklyn by student activists who think Obama is just a sell out. Virtually everybody politically active on the liberal wing of the Democrats is involved in a perpetual one-note riff on the theme of Obama’s timidity; his “capture” by Clinton-era machine politicians and Wall Street. “The Good the Bad and Geithner” was Arianna Huffington’s memorable headline on her balance sheet of the first 100 days.

Among mainstream political journalists there is a certain insouciance about all this: if politics is just elections and polls, then Obama is flying high. His approval rating is good, he’s just recruited a Republican senator, taking him close to the tipping point where he can get his laws through Congress with ease. But I can’t help recalling what happened with the TARP in September.

Paulson’s bank bailout plan enraged right wing, small town America – and that rage coincided with the rage of the liberal left. Both saw the bailout as wrong in principle, both pressured their representatives. The result was the final few weeks of the Bush administration found it trapped between left and right wing plebeian rage.

There is no rage right now – the tax tea parties were stunts organized by a Republican base layer whose top political leaders remain disoriented. But give it time. Ed and his colleages were mainly laid off last September. Six months unemployment, plus two Federally funded extensions, should take them to September 09. “That’s when the rubber meets the road,” says Ed. “People will lose their cars, their vehicles.”

Meanwhile we have not yet seen the full shape of Geithner’s bank bailout. While in Britain the failing banks were sternly ordered to take state money, and the government took a massive stake (if not control), in the USA there is still something of a fandango going on between Geithner and Wall Street; the banks are determined not to be recapitalized by the state, not to give up a major stake and have lobbied hard to make sure the coming bailout deal is highly favorable to them.

Not a day goes by without the leader writers and senior op-ed people at the New York Times, HuffPo, Truthout etc denouncing this as treachery and pronouncing that it will fail. We’ll see: at my Brooklyn party there were also plenty of people prepared to believe that Obama is planning an unannounced coup against the banks that will leave Citigroup and Bank of America partially nationalized.

The nightmare for Obama is: what if the fiscal stimulus fails to deliver, while simultaneously enraging the small-town conservatives; meanwhile the bank bailout delivers only to the Wall Street elite, simultaneously enraging the urban left. And what if this coincides with Ed and his mates having their dole cut off, and my student radicals and their mates entering the jobs market to find there are no more jobs in Starbucks?

100 days is too soon to judge any presidency, certainly on the economic front. But America’s media and civil society is alive with “Plan B” discussions. Many Republican governors are quietly implementing a Plan B version of the stimulus, allocating money to projects that reflect their own political and economic philosophies. In the pages of the New York Times it’s more overt: from Krugman, Stiglitz and Robert Reich you have a daily dose of advice to Obama to cauterize the banking losses, spend the stimulus money faster and just generally to get on with it.

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