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VIDEO #2: Elkhart is No. 1 Now in a Good Way

November 4, 2010 by · Leave a Comment 

MSNBC.com spent time in Elkhart, Ind., last year as part of The Elkhart Project to study how that community struggled with the recession and RV downturn. Read a brief MSNBC.com story below, view today’s Featured Video #2 or click here.

In the depths of the recession, Elkhart, Ind., held an unenviable title: The metropolitan area was suffering from the highest year-over-year increase in its unemployment rate in the nation.

Now, it can claim a much more optimistic mantle: On Wednesday (Nov. 3), the Bureau of Labor Statistics reported the Elkhart metropolitan area saw the biggest improvement in its unemployment rate in the nation in September, as compared to a year earlier.

Of course, Elkhart – like the rest of the nation – isn’t out of the woods yet.

The area’s unemployment rate stood at 13% in September, 3.1 percentage points lower than in September of 2009. That’s still well above both the national unemployment rate, which is hovering around 9%, and far from where community would like to be in order to see its economy fully rebound.

But it’s a vast improvement over 2009, when the metro area’s unemployment rate hit a high of 20.1%.

The community had been devastated by the recession and economic crisis, which dealt a fierce blow to the area’s all-important RV industry. The hardship drew national attention after President Obama made several visits to the area.

A team of editors, writers and multimedia producers from msnbc.com also spent a year in Elkhart, following the community’s struggles closely. The Elkhart Project covered everything from the city’s efforts to reinvent itself to the devastating effect the economy has had on everyone from teens to the elderly.

Chances are, many in Elkhart aren’t surprised by the reversal of fortunes. Even back in 2009, many there said the area tends to be the among the first in the nation to go into recession, and also among the first to lead us out of recession.

That’s because RVs are the type of big-ticket discretionary item that people tend to stop buying soon as the economy starts to turn sour. The credit crunch, which made it hard for people to get financing for things like RVs, made matters even worse for companies in Elkhart this time around.

These days, many in Elkhart are feeling cautiously optimistic.

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A City’s Mixed Feelings About Obama Impact

February 3, 2010 by · Leave a Comment 

Editor’s Note: Mike Stuckey, senior editor for MSNBC.com’s Elkhart Project, in this story updates readers a year after President Obama visited Elkhart, Ind., to lobby for his economic stimulus package. To see the entire package, click here.

President Obama addresses a crowd in Elkhart, Ind., in February 2009.

President Obama addresses a crowd in Elkhart, Ind., in February 2009.

One year after President Obama thrust Elkhart County, Ind., into the national spotlight by using it as the launching pad for his economic stimulus proposal, positive signs abound.

The region’s recreational vehicle industry, which was decimated by the recession, expects significant growth in coming years; businesses have announced nearly $400 million in new investments in the area; and the county has a fighting chance to become a leader in the electric vehicle industry.

But many locals are still watching warily for the only bottom line that really matters to them: new jobs.

Among them is Jeffery Ricks, 47, who last held down a full-time position as a welder at Godfrey Marine, an Elkhart manufacturer of small pleasure and fishing boats, more than two years ago.

“You know it’s going to be OK,” he said with a smile, “but the thing is, when?”

It’s a question that bedevils policymakers and pundits alike: When will the economy, which many indicators suggest is emerging from a deep recession, start producing new jobs?

At the local level, in Elkhart, political leaders believe the answer is soon.

“By 2011, this county is just going to explode with jobs and people,” said County Commissioner Mike Yoder, who has been working to entice new businesses to the area.

Dorinda Heisen-Guss

Dorinda Heisen-Guss

“Everything is full throttle,” said Dorinda Heiden-Guss, president of the Elkhart County Economic Development Corp., ticking off bullet points of hope for the county’s thousands of jobless workers.

The recreational vehicle industry, around which much of this region’s economy revolves and often seen as a bellwether for the nation’s fiscal health, appears to be recovering as many manufacturers rehire laid-off workers. A study done for Heiden-Guss’ group predicts 22%-plus annual growth for the next four years after a 74% decline in shipments since late 2005.

In 2009, businesses announced plans to spend $134 million to locate or expand operations in Elkhart County, creating a predicted 3,300 jobs.

Early this year, Norwegian company Think said it would spend $56 million setting up a plant to assemble electric cars, hiring 415 workers by 2013; and a new company known as Family Holiday Village Elkhart said it would build a $205 million European-style family resort that will create 500 construction jobs, 500 permanent jobs and draw a million tourists a year to the county within a few years.

It’s a big change from when Obama visited the city early in his presidency to pitch the economic stimulus plan. In his speech, Obama cited that fact that Elkhart’s jobless rate had tripled over the previous 12 months to more than 15%.

“We’ve got the best workers right here in Elkhart, who are willing to put in hard time and do whatever it takes to make sure a company succeeds, but they’ve got to have a chance,” the president said on Feb. 9, 2009, to hearty applause from his audience at Concord High School.

Not long after Obama’s trip, Congress passed a $787 billion stimulus plan. One year later, Elkhart’s jobless rate has fallen to 14.8% after hitting a high of 18.9%. The falling rate is due to some workers being rehired or finding new jobs but also due to some simply giving up, but it is still about triple what it was in boom times. Nationally, the unemployment rate is 10%, a stubbornly high number that has forced Obama to propose new incentives for companies to increase hiring.

Elkhart County Commissioner Mike Yoder sees lots of new economic activity in the county, but he admits it may be a while before new jobs show up in large numbers. Elkhart’s Yoder believes it’s going to take time for people to see a difference in their individual working lives.

“There is still a lot of cynicism out there, and I sense this as we announce the incentives to pull these businesses in,” Yoder said. “People are saying, ‘That’s great but I still don’t have a job.’ It’s unfortunate that it’s going to take a while for these jobs to show up. That’s just the way it is.”

And “just the way it is” includes plenty of cold facts to temper warm visions of the future:

Despite Elkhart’s falling jobless rate, an estimated 14,000 local workers remain unemployed. IHS Global Insight, a consulting firm, forecasts Elkhart won’t return to pre-recession employment levels until 2039.

The median price of a home in the county has plummeted to late 1990s levels, below $90,000, and continues to fall. Sales in 2009 were down by 35% from 2006.

As jobless residents exhaust savings and unemployment benefits, social service agencies are facing more requests than ever for help. One, Church Community Services’ food pantry in downtown Elkhart, served a record 2,169 households in December, more than 24,000 for the year, a 21% increase from 2008.

Area residents are split on the impact of the president’s stimulus package and his visits — he made two as a candidate and two as president.

Elkhart Mayor Dick Moore

Elkhart Mayor Dick Moore

Elkhart Mayor Dick Moore believes the county’s share of the $787 billion in spending and tax cuts has generated thousands of jobs locally, both directly and indirectly. But an msnbc.com tally could only find a few dozen new jobs directly created by the $50 million in stimulus money that has poured into the county, much of it grants that school districts would have received anyway.

Elkhart artist Shana Dines, who attended two of Obama’s local speeches, sitting right behind him and shaking his hand at one appearance, said her family’s finances had been “in disastrous circumstances” as a result of her husband’s hours at an RV supply firm being cut.

Now, “things have picked up unbelievably,” Dines said. “They’re working overtime and last year at this time they were down to four days a week.” As a result, the family was able to get a mortgage modification and hang onto its home.

“I’m not sure how much of that was Obama, but because of where he’s come from, he knows what it’s like to struggle and he wants to see the common people survive,” she said.

Graphic designer Justin Graber has seen business improve at the Elkhart ad agency where he works, but he believes that Obama’s attention to the county likely had as much of a negative effect as a positive one.

“I honestly think if the government would just get out of the way and let us go back to work, it would be better,” said Graber, a founding board member of the Michiana 9-12 Project, a group inspired by conservative TV and radio host Glenn Beck that stresses family and religious values over government solutions.

“I know it’s well-intentioned, but the ups and downs of the economy are just as emotionally driven as they are by business factors, and I think people pull back even more when they worry about where this (stimulus) money will come from,” he said.

Angie Recchio, a sales rep with an Elkhart decal maker that serves the RV industry and also active in the 9-12 Project, agreed that the government should stand back.

“We’re certainly very grateful that things bottomed out and seem to be improving,” she said, “but I think the free market economy works and its cyclical and it would cycle on its own.”

Regardless of where folks stand politically, there’s an almost palpable sense of fatigue for having their community held up again and again as the poster child of recession. “Most people are optimistic,” Recchio said. “People are ready to stop talking about it and move on.”

Real estate agent Cory White agreed, even though as a specialist in distressed property sales, he does not believe the real estate market has hit bottom yet.

“I think we’re back on track,” he said. “I think the jobs are coming.” Locals are more focused on the positive now than the negative, he said. “Elkhart’s been known for being first in and first out of a recession. We’re on our way.”

Heiden-Guss, of the Economic Development Corp., said her organization was “grateful for the coverage, even though it was dire at many times. I will say the notoriety has kept us extremely busy, both good and bad. We’ve had a lot of interested parties migrating toward the money.”

But Yoder, the county commissioner, said the best prospects for growth and new jobs are with companies that were on the county’s radar screen long before the economy tanked.

“It’s not just because the president visited here,” he said, although “that didn’t hurt.” And, he acknowledged, “we are using elements of the stimulus package to help these companies along.”

Perhaps the most exciting prospect for the area’s future is the growing buzz that Elkhart County could become a hotbed of electric vehicle development and manufacturing. Joining Think locally in that niche are Navistar, which plans to produce electric delivery trucks, and Electric Motors Corp., which is developing hybrid pickup trucks.

Indiana Gov. Mitch Daniels has “identified Elkhart County as the new electric vehicle capital,” Heiden-Guss said.

And while it will take some time for those jobs to arrive, workers like Ricks, the unemployed welder, and his partner, Suncearay Shorter, are willing to wait it out.

“Nothing happens overnight,” said Ricks, who said she lost her job with insulation supplier M.A.P. two months ago.

“It’s hard,” Shorter said, “but we have patience.” Besides, she added, there’s more to life than jobs and money. The couple are expecting their first baby together in September.

“God is good,” said Ricks.

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Amid Economic Woes, Elkhart’s Businesses are Adapting

August 17, 2009 by · Leave a Comment 

Elkhart, Ind., has many, many stories to tell.

There are stories about lost jobs and economic hardship. There are stories of people and businesses seeking to transform themselves to meet the needs of a fast-changing world

In many ways — largely thanks to visits to the region by President Barack Obama and the accompanying national media — the northern Indiana city famous for RVs and manufactured housing has become the face of the current recession, according to the Indianapolis Star.

While Elkhart is heavily reliant on the RV and housing industries, the challenges of the current economy ripple throughout the community. Elkhart County’s high unemployment rate, 16.8% in June, has actually been showing some improvement since the dark days of winter, when the rate reached around 19%.

That sort of economic stress has businesses of all sorts trying new things.

Elkhart-based Coachmen Industries’ All American Homes unit constructed a “Living Zero Home” for the U.S. Department of Energy. The demo home is on a national tour to highlight ways people can save on utility bills and energy usage.

“The actual home design that inspired the Living Zero model will be introduced through our builder network and our company-owned retail centers in mid-August,” Coachmen CEO Richard Lavers wrote in a July 30 update to shareholders.

Such initiatives could pay dividends in the years to come. The need for such new initiatives is urgent. The company’s revenue of just over $29 million for the first six months of 2009 is down a whopping 58% from the same time a year ago.

The Elkhart Truth, as the local newspaper, is well placed to tell all of those stories of hardship and hope. But the news media industry itself has been in a state of turmoil as it confronts an advertising slump and many new forms of competition from the Internet.

The Truth, however, has found itself working with MSNBC.com as part of the Internet news provider’s ongoing initiative called “The Elkhart Project.”

The project (which can be found at elkhartproject.com) includes stories, photos, videos, a blog and links to social media sites Twitter and Facebook — all of the content dedicated toward telling Elkhart’s story.

“It’s energized the entire newsroom,” said Greg Halling, managing editor of The Truth. “It’s just transformed us in any number of ways.”

“We’ve been a lot more aggressive about developing our website. . . . On a good day, we’re cranking out a lot more stuff during the course of the day than we ever did before.”

He said his staff has gained valuable experience from working with MSNBC.com’s veteran journalists in contributing content to the site.

Mike Brunker, projects editor for MSNBC.com, said there was some criticism in the early days of the project that the site was painting too dark a picture of Elkhart. But he added that working with local journalists has helped provided deeper coverage.

Halling said page views on eTruth.com, the paper’s website, have been consistently higher since the start of the collaboration roughly six months ago.

Plenty of challenges remain for Elkhart, as they do for the rest of the nation. But transformations of businesses and communities can happen.

And that’s one heck of a story.

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Newmar Owners Meet at Elkhart County Fairgrounds

August 10, 2009 by · Leave a Comment 

Editor’s Note: This is another in a series of stories by MSNBC.com about Elkhart County, Ind. 

The Elkhart County 4-H Fairgrounds turned into a caravansary for more than a thousand wandering RVers this week. Roughly 440 RVs showed up to the fairgrounds for the 24th Newmar International Kountry Klub Rally.

The most RVs, 42, came from Florida. Another 35 were from Michigan. Thirty were from Missouri, while 16 were from Indiana. Two rigs came all the way from Alaska.

But the gathering of RV enthusiasts falls under the shadow of a devastated industry. Since a peak of 390,000 RVs sold in 2006, sales have dived 65 percent. Experts aren’t expecting much of a sales rebound any time soon.

The RVers at the fairgrounds aren’t ignorant to the industry’s woes. Many are well grounded to the troubles plaguing RV manufacturers. Still, that hasn’t stopped them from rallying behind the tattered flags of the RV industry.

Sitting in a lawn chair outside their 2002 Newmar model on Thursday (Aug. 6), Ed and Yvonne McGann discussed RVs with other owners. The couple are usually at an advantage in such conversations. For the past nine years, the Texas natives have been wandering the country, visiting all of the lower 48 states.

“We do not have a principal residence,” said Ed McGann. “We wanted to get away from that traditional lifestyle.”

Ed McGann says he and his wife are able to continue the gypsy lifestyle because of their retirement savings. For most of his working life he’s set aside 10 percent of his gross income. Rather than investing it, he’s saved.

“It’s a very expensive lifestyle,” noted Yvonne McGann. “It’s a privilege to be able to do this.”

It’s a privilege the couple has cherished. Ed McGann says he’s seen many fellow RV-ers settle down because their retirement savings was cut in half in the waning months of the recession. Yvonne says, Aside from their savings, Medicare and Social Security has allowed them to continue RVing.

“There are those of us who are too crazy to figure out we’re broke,” joked Ed McGann.

Several lots down from the McGanns was Tom Canerty. Like the Texas couple, he’s been RVing for years and has been to a number of RV rallies. Canerty is a traveling salesman for Lee’s RVs in Oklahoma. He says he’s noticed several trends at the rallies he visited.

“If there’s any demand, it’s for the higher end models,” he said.

The RVs on display at the Newmar rally range in price from $100,000 to $750,000. Canerty says that those who can afford the more expensive RV have been less affected by the economic downturn and thus will continue to upgrade for the upper tier models.

“We’re also seeing people that would normally buy a new coach every three years are instead upgrading their coaches,” Canerty said. Painting, carpet and upholstery vendors, Canerty says, do very well at such rallies.

But many note that the numbers at such rallies have been down. In 2007 the Family Motor Coach Association International Convention registered 3,822 non-commercial coaches at the event. In 2008 only 2,774 registered for the March convention. This year’s FMCA International Convention, held in Bowling Green, Ohio, two weeks ago, registered only 4,226.

Barney Barnett, International Kountry Klub director, says despite a slide in registration at this year’s Newmar rally, he maintains a positive outlook on the industry.

“I’m cautiously optimistic. It will come back. But don’t get me wrong it won’t get back to the level it was before,” Barnett said. “Looking at it from the sidelines, there’s a long way to go.”

According to the Recreation Vehicle Industry Association (RVIA), a substantial number of Americans maintain an interest in the market. The RVIA estimates nationwide there are as many as 30 million RV enthusiasts, including RV renters.

At Friday night’s closing ceremonies for the Newmar rally, over a thousand such enthusiast packed the largest building on the fairgrounds.

“The industry itself is getting stronger by the day,” said U.S. Rep. Joe Donelly, D-Granger, before the cheering crowd of Newmar RV owners. “We’re working real hard to have a stable fuel price and a low fuel price. I know how important that is.”

Ed McGannon said he prays that fuel prices don’t jump back up. In 2008, when the spike in fuel prices took many RV-ers off the road, Ed and Yvonne McGann were able to continue wondering the country in their RV. He hopes to continue to go to RV rallies and has even toyed with the idea of caravaning through Central America.

One thing is certain, he says. “We would absolutely never consider moving back into a house.”

Focus on Community

Newmar had originally scheduled its annual International Kountry Klub Rally for Perry, Ga. However, with the harsh economic atmosphere in Elkhart County, Kountry Klub officials decided they would hold the rally close to home.

“Newmar is located in Elkhart County and we wanted to do something to help support local business and drive traffic to the county,” said Barney Barnett, Newmar’s International Kountry Klub director.

The change in venue wasn’t the only thing the Klub did to support the local community. It held a food drive throughout the six-day rally to raise money and food for the Nappanee Christain Development Center. A total of $1,068.25 was raised and a truckload of food was sent to the center.

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Hoosier RV Supplier Counting on Free Market Economy

July 17, 2009 by · Leave a Comment 

Editor’s Note: This is the latest story produced by NBC.com which is doing an in-depth study on Elkhart County, Ind. This story was published in The Elkhart Truth.

elkhart-city-logo1Outsiders puzzled that a smart, career-oriented young woman would return after college to a place that many of her school chums couldn’t wait to leave should consider Elkhart native Angie Recchio’s story.

In 2000, at 23, just finished with her work in human development and family studies at Indiana University in Bloomington, Recchio returned to town with a stack of bills and a dream of settling in her own home along one of Elkhart’s elegant, tree-lined streets.

She said she was the only one of four girls who went from nursery school through high school together who had that vision. “All of them wanted to get out,” she said. And they did.

“I lived in my mom’s basement, paid off my credit cards and all my loans, and a year and half later I bought my first house,” said Recchio. The immaculate two-bedroom bungalow sits in a Beaver Cleaver neighborhood a stone’s throw from East Jackson Boulevard, where brick mansions and sprawling ramblers guard the banks of the St. Joe River.

The house would not be considered a “starter” for a single wage-earner fresh out of college in most parts of the country. In Elkhart, however, the price was $83,000, a little more than half the U.S. median home price in both 2000 and today. A few years later, Recchio was able to add a rental property to her portfolio.

To Recchio and other residents, Elkhart’s attractions go far beyond cheap real estate.  And they believe those features, which include a powerful sense of community and the tendency of residents to look out for one another, are what will see the town through the current economic storm.

A ‘special’ place
“It’s special in all the ways where you live is special to you,” said Recchio, 33, single and a sales rep for a company that serves the battered RV industry.

Family and faith come first in her life, as they do for many townspeople. In Elkhart she is among relatives, including her parents and an older brother, as well as lifelong friends. Raised a Catholic, she is a member of St. Vincent’s, but also attends services at a Methodist church.

The town is clean and safe, she said, and the schools – she attended Pinewood Elementary, Northside Middle and Central High – are good. Elkhart’s performing arts center, river walk and numerous parks are the envy of similar sized cities.

“But statistically speaking,” Recchio acknowledged, “the unemployment rate is what it is.” Currently, it’s among the highest in the nation at 19.2%, having quadrupled since last year, when high gas prices sent sales of RVs into the tank.

valley-screen-big-logo-1At her firm, Valley Screen Process Co. Inc, which makes decals for RVs and boats, the slump resulted in a drop in orders and layoffs.

But Recchio, who kept her job, is concerned that Elkhart’s economic problems have been singled out too often and too superficially by journalists who descended after President Obama came here in February to push his stimulus plan.

“If it has affected anybody’s business or job in a negative way, I feel bad for them, she said. “But we’re just a small example of a greater problem. We’re going through the same thing the rest of the country is.”

‘It will come back’
Outsiders need to know that “we had some really high highs. … I don’t know if we’ll ever get back to where we were or how long it will take, but certainly it will come back stronger than it is today.”

She is not counting on federal stimulus programs. “I don’t think my confidence really has anything to do with the government,” she said. “I think you have to let the free market economy and capitalism work because that’s what works.”

For now, she said, “We’re pulling together like a community in ways I’ve never seen before. … The people who are still employed are feeling that sense of responsibility to be more involved and give more and support to businesses that are still open.” She said she has seen an increase in church and community outreach to families via food drives and other programs.

Elkhart “is a better place to be broke than anyplace else,” she added. “You don’t see people sleeping under bridges here.”

With a decade of living her dream behind her, when Recchio looks ahead to the next 10 years, she can envision more ups and downs in the area’s economy but doesn’t see much changing in the fundamentals that drew her home after college.

“I imagine it will be much the same as it is now,” she said. “I’m happy, I’m surrounded by my family. There’s not a thing I need that God hasn’t given me or provided for me.”

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MSNBC.com Chided for Elkhart Coverage

May 13, 2009 by · Leave a Comment 

Is msnbc.com painting a picture of Elkhart that is too bleak?

That’s the contention of some Elkhart Project followers on Facebook, who feel that the portrayal of the economically hard-hit city so far has been too harsh, reports Mike Brunker, left, projects team editor for msnbc.com, which is doing an in-depth look at Elkhart’s economy.

Here are a couple of the comments from his posting on www.newsvine.com:

“Frankly, as an Elkhart resident, homeowner and worker who is prospering, I find the doom and gloom massively over the edge,” wrote Patti Andrews. “It as if MSNBC wants to see this town fail and turn into a ghost town.”

And Jennifer Holderread asked us to “start showing those of us who are still working, struggling, and paying for all of those who are not! … Yeah Elkhart is in a very bad place right now! But there are a lot of us who are trying to figure out how to bring it back. Start telling those stories!”

Another reader, Tommie Lee, said he thought msnbc.com photographers might be waiting for passing cars to get out of the frame before snapping pictures. “Are you trying to help the situation or find creative ways to make Elkhart look pathetic?” he wrote.

You can read the entire conversation on their Facebook page.   (Requires Facebook registration.)

To answer Tommie’s question, no, we haven’t been waiting for cars to pass before taking photos or otherwise trying to skew the view of the city’s situation. And we have reported a few positive stories, such as self-help groups for unemployed workers  and about individuals and private groups pitching in to help feed hungry kids.

But there’s no denying that we’ve spent much of our first month and a half in Elkhart documenting the depths of the economic hardship, simply to help readers elsewhere in the nation understand the challenging situation the city is facing.

We also agree that the time has come to look at some of the positive stories that we’ve encountered there. That’s where you can help.

If you live in Elkhart County or nearby, tell us about the positive stories you see in your community. If you know of individuals or businesses that are rising to meet the challenge or charting new paths toward a brighter future, we want to hear about them.

And if you live elsewhere, let us know what’s happening in your community to respond to the recession. Is there a lesson there for Elkhart?

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MSNBC.com Continues Elkhart Examination

April 30, 2009 by · Leave a Comment 

Editor’s Note: MSNBC.com is conducting a year-long study of  Elkhart, Ind. This 2,300-word story, which appeared in The Elkhart Truth, is the latest installment in a series of stories from that project.

In the same way that people might speculate about a couple that could be heading for divorce, business leaders in Elkhart, Ind., sometimes talked about what could happen if the recreational vehicle industry took a serious turn for the worse.

They’d seen it happen before in the early 1970s with the energy crisis and in other recessions since. But this was back a few years ago, when business was booming, and such talk seemed more theoretical than practical, as you might discuss the need to get a new roof, eventually.

“Yeah, there may be a desire to implement change, or diversify,” said Brian Gildea, economic development director for the city of Elkhart. “But when it’s not broken, the impetus to change is not there.”

Now the so-called “RV Capital of the World” is seeing a scenario that even the most pessimistic didn’t think would come to pass.

A season of high gas prices, a deep and lasting recession, a drop in home and investment values and a severe shortage of credit have conspired to decimate the RV industry, which officials say once accounted for as many as one in four jobs here.

The unemployment rate in Elkhart County hit 18.8% as of March, up from just 5.8% a year earlier. That was the largest jobless rate increase of any metropolitan area in the country.

Many local companies, including RV makers and their vast network of small, independent suppliers, have either cut back or gone out of business entirely, leaving the community with millions of square feet worth of vacant manufacturing buildings and thousands of unemployed workers.

‘Diversification is easy to talk about …’
The hard fall for Elkhart’s economy shows the dangers of depending too heavily on one industry for economic health, but also the difficulties of diversifying away from the main engine of a community’s economic activity. As Elkhart struggles to recover, residents are seeing firsthand the monumental task of clawing back from such a massive economic hit at a time when virtually every city in the nation is also suffering from the  recession.

“Diversification is easy to talk about, but it’s not easy to bring about,” said Bill Johnson, who several years ago led an effort called the Horizon Project that aimed, in part, to draw a more diverse group of businesses to Elkhart County.

Experts point to success stories such as Akron, Ohio, which was able to create a niche in the polymer industry when the rubber industry began to decline. But they also offer up cautionary tales such as Gary, Ind., which has struggled for decades since the heyday of the steel mills.

The hard truth, many say, is that making an economy less reliant on one major industry can take a decade or more. Ned Hill, dean of the Levin College of Urban Affairs at Cleveland State University, said success often depends on politicians and business leaders who can help a community grow while not fighting too hard against market forces.

“The No. 1 rule is: Don’t allow yourselves to be a victim. You don’t want to do what Youngstown did and what Philadelphia did and say, ‘It’s always come back, it’s going to come back one more time,’” Hill said.

Youngstown, Ohio, has taken years to recover from the decline in steel, while Hill faults Philadelphia-area politicians for spending too much time and money battling cutbacks at its Naval Shipyard, which once employed thousands.

‘They will come back’
Many in Elkhart insist that the RV industry will revive, citing the allure of the open road and desire to be in the outdoors that stokes long-term demand. But even the most optimistic concede this recession has been deeper and more troubling than past downturns. If the RV industry emerges, it may look different than it did during the boom times just a few years ago.

“We don’t have an industry that’s no longer viable,” said Gildea, the Elkhart economic development director. “They will come back. It’s just a question of at what level.”

That leaves Elkhart, along with countless other communities across the Midwest, struggling with the question of what other businesses they can attract to the area. The additional conundrum for Elkhart – and many other communities in Indiana, Michigan and Ohio – is that they have continued to rely mainly on manufacturing for their economic well-being rather than transitioning to more service-oriented work.

Manufacturing accounted for about half of the Elkhart area’s jobs during the boom times. With the recession, that figure has dropped to around 43%, according to state statistics, still well above the national average.

“There’s a lot of diversity in this county in the sense of manufacturing. But that’s the issue: manufacturing,” said Richard Lavers, CEO of Coachmen Industries Inc., an Elkhart company that recently shed its RV business to concentrate mainly on modular homes.

“Is that a good or a bad thing? You play to your strengths,” Lavers said. “Unfortunately, manufacturing is becoming rarer and rarer and rarer.”

Even those who have long touted the importance of technology to the region concede that it would be hard to attract high-tech, white-collar jobs. Many manufacturing workers here have been able to make a very good living without a college education or advanced training. The area’s location, on a major interstate near the middle of the country, combined with its vast landscape of low-slung manufacturing facilities, make it ideal for such work.

“I see Elkhart remaining a primary manufacturing economy for the foreseeable future,” said Jim Walsh, vice president of the North Central Indiana Business Assistance Center. “I think the kind of manufacturing is going to change, (but) we’ve always prided ourselves: We make stuff.”

Walsh – who regularly runs workshops helping manufacturing operations become more efficient – still hopes technology will play a role in the area’s recovery.

“We’re still building things like we were 50 years ago, and we’re not going to last,” he said.

Elkhart’s woes may be more extreme than others around the country, but they are not unique. John Stafford, director of the Community Research Institute at Indiana University-Purdue Fort Wayne, said he’s watching many communities struggle with whether they can leave their manufacturing roots to evolve into more of a service economy.

“Every one of us is looking to answer that question,” he said.

Other Midwestern cities including East Peoria, Ill., a manufacturing hub for struggling Caterpillar, and Flint, Mich., once a mecca for auto manufacturing, are wrestling with a similar plight.

Diversity faded over the years
While it’s easy to judge such cities in hindsight, it can be almost irrestible to hitch the civic wagon to a single industrial star in good times.

“The reality is that if you’ve got an industry that’s paying good wages and good returns, the best bet is to go start working for them,” said Hill, the Cleveland State professor.

It also hadn’t always been this way in Elkhart. When Angie Recchio was growing up here, she figured she’d have her choice of three industries for a career: pharmaceuticals, band instruments and the RV business.

But by the time Recchio had grown up, earned a college degree and returned to her hometown, her choices had narrowed. The pharmaceutical and band instrument companies that were once such a major presence had mostly been sold to larger companies, who in turn sent thousands of those white-collar and factory jobs elsewhere.

For her and her peers, it seemed like the options were to go into the RV industry or get a service job, perhaps at a car dealership or restaurant.

Recchio, 33, chose the RV industry. Now she works as a sales representative for Valley Screen Process Co., which makes decals, mostly for RVs. She believes the RV industry will revive but says the downturn has prompted her company to look more aggressively for other customers.

“Maybe it’s a wake-up call,” she said.

‘Way too deep in one industry’
Some in the community have been working for years to recruit new industries.

“There were a lot of people who lived here who said, ‘Hey, we’re getting way too deep in our one industry,’” said Tom Stark, a vice president at Lake City Bank in nearby Goshen.

In part to address that concern, county leaders formed an Economic Development Corp. in 2000. A few years later, the community began work on the Horizon Project, an ambitious effort to expand educational opportunities in the county, deal with infrastructure problems and grow the county’s economic base.

But they hit roadblocks.

Stark, a member of the EDC board, said many businesses were reluctant to come to Elkhart County because the bustling RV industry kept the unemployment rate extremely low, making it hard to find workers.

For the same reason, some in the RV industry were unhappy with diversification efforts, said John Letherman, president of the Elkhart County Council.

“You bring in more companies, that just makes the labor pool that much smaller,” Letherman said.

Johnson, who headed the Horizon Project after selling his own rubber business, also said some companies were looking for a more highly skilled workforce than Elkhart had to offer.  But over the years, many of the other companies that had once employed engineers, chemists and other highly skilled workers had left town, and the RV industry does not generally require those types of advanced skills.

Some workers are heading back to the classroom now. About 600 former RV workers have enrolled in retraining programs through the area’s Ivy Tech Community College, where overall enrollment is up. But efforts to educate a workforce can take years.

“Retraining’s a wonderful thing, but it’s not going to happen overnight,” Johnson said.

Reasons for optimism?
Despite the difficulties, community leaders see reasons to be optimistic. People at the EDC and the city of Elkhart say they are fielding hundreds of calls from people inquiring about doing business in the county. That’s thanks in part to President Barack Obama, who drew national attention to Elkhart’s plight in his three appearances there.

Still, with the rest of the nation also in recession, it’s tough to say when, or if, that attention will translate into new business and jobs. The county also is facing stiff competition from other communities hungry for new industry.

Boosters say Elkhart has several competitive edges. Where once potential businesses fretted about not finding enough workers in Elkhart, now the county can point to a willing workforce that is accustomed to hard, physical labor in the RV factories, which often pay according to production.

And they say Elkhart has a long history of entrepreneurship, pointing to the many businesses that have sprung up in recent years to supply the RV business. The community, they say, is a resilient one.

“We’ve been in a hole, but we’re trying to look up and see out of it,” said Dorinda Heiden-Guss, head of the county’s EDC.

Elkhart officials say their community could be a hub for other business, such as storage and distribution facilities. And many are hoping that a recent decision to locate a major nanotechnology research facility in nearby South Bend eventually will bring work to Elkhart.

Robert Dunn, managing director of that facility, the Midwest Institute for Nanoelectronics Discovery, said there is potential for work there to lead to manufacturing in Elkhart, but not for three to seven years.

Meanwhile, many small businesses that have supplied the RV industry also are seeking to diversify.

Promens’ Elkhart facility once did the bulk of its plastics processing for the RV industry. Now, the bulk of the work is for other industries. But Jack Welter, vice president of Roto North America, a division of Promens, said that is largely because the company closed two other factories elsewhere and shifted that work to the Elkhart facility.

“I don’t want to take too much credit on diversification,” he said.

When Kirk Veer started seeing business slip at American Stonecast Products, which supplies sinks to the RV industry, he tried to get retailers interested in his products. But Veer, who is president of the small company, said he quickly found he didn’t have enough of a product line to interest big stores.

Now, instead of pursuing business outside the RV industry, he’s hoping to stay afloat in part by adding lightweight countertops and tabletops to the roster of things he supplies to RV makers. 

Many businesses interconnected
Another issue for communities tied primarily to one industry is that even other companies in town are often linked to the primary industry. Goshen Coach, a division of Thor Industries Inc. that makes small buses, is by some measures one of the bright spots in Elkhart’s struggling economy.

So far, the manufacturing facility has lost employees only through attrition, said Troy Snyder, Goshen Coach’s president. Executives hope federal stimulus money will help business, because local governments will have more money to buy vehicles.

But Goshen Coach relies on about 300 suppliers, including many in Elkhart County that also supply the RV industry. About a dozen of those suppliers have gone out of business because of the RV industry’s troubles, leaving the bus company to find new suppliers.

The company gets its chassis primarily from troubled U.S. carmakers GM and Ford. Because both of those companies are periodically shutting down their manufacturing lines to save money, Snyder said the company has been forced to keep more chassis on hand than it would like so it doesn’t get caught without the much-needed base for its buses.

On the plus side, many in the RV business say they are starting to feel hopeful that things won’t get worse. They talk of a good week here or there, and say the RV industry typically picks up in the spring and summer months.

“We think we’re at a point where we can ride it – we’ve hit bottom,” said Derald Bontrager, president and chief operating officer of the RV company Jayco Inc.

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Moody’s/MSNBC.com Debut ‘Adversity Index’

April 8, 2009 by · Leave a Comment 

 

What ails the economy does not afflict every community equally, but the recession has reached nearly every corner of the nation. A new index of economic health shows the recession spreading to 93% of the metro areas in the U.S., and 44 of the 50 states, by the end of January.

The new measure, the Adversity Index, is produced by Moody’s Economy.com and msnbc.com. Each month, the index will take the economic temperature of every metro area and every state. Each one will be judged to be either expanding, at risk of recession, in recession or recovering. The index uses federal data and Moody’s estimates on employment, industrial production, housing starts and house prices to track changes in jobs, industrial output, investment and wealth.

The recession has hit hardest in Elkhart, Ind., a struggling Midwestern city that msnbc.com is focusing on, as part of a special project to tell the story of the nation’s economic suffering. By January 2009, employment in the Elkhart metro area had fallen 9.4% from a year earlier, the worst decline in the nation. Industrial production fell 21.9%, also the worst, according to The Elkhart Truth.

Only six states — Alaska, North Dakota, Oklahoma, South Dakota, Texas and Wyoming — were not in recession in January. But the Adversity Index designates each as at risk of recession, meaning they were in transition from expansion toward recession.

Looking more closely at metro areas, 93% were in recession by the end of January 2009. That’s 353 out of 381, up from only 88 a year earlier.

Of the 28 metro areas not in recession, most were in energy-producing areas of the Southwest and West. Of those, only one, the inland port of Laredo, Texas, was still expanding in January, boosted by strong trade with Mexico. But even in Laredo the news was mixed: Its employment levels and home prices were still rising, although industrial production had fallen. The rest of the 28 areas were judged to be at risk, meaning they appeared to be in transition toward a recession.

The area that has been in recession the longest, according to the Adversity Index, is Detroit, which fell into that category in August 2005. It was followed over the next year by Flint, Saginaw, Ann Arbor and a host of their Michigan neighbors.

A manufacturing downturn reached the carpet-making areas of northwest Georgia by the summer of 2006, then later that year took hold in parts of Indiana and Ohio.

“It’s kind of two recessions at once,” said Andrew Gledhill, an economist for Moody’s Economy.com. “A lot of these industrial Midwest areas, especially those linked to automobile manufacturing, have really been suffering since 2000. It had been slow, then really was exacerbated.”

The downturn spread rapidly in 2008. That January, the index showed only two out of 10 metro areas in recession. By April, it was three in 10. In July, five out of 10. Then came the worst of the financial market turmoil, in September and October. By the time voters elected a new president in November, eight out of 10 metro areas had been hit. As of the end of January this year, the figure was nine out of 10.

The downturn arrived in Elkhart by December 2006, as sales slowed of its biggest product, recreational vehicles. The recession fell heavily on Elkhart, not only because of high gas prices but also because RVs are a big-ticket, discretionary purchase, often among the first expenses cut from household budgets.

Dependence on manufacturing stands out as a key problem in Elkhart. Of all the metro areas in the U.S., Elkhart-Goshen had the highest share of its workforce in manufacturing jobs, according to a Moody’s estimate based on Bureau of Labor Statistics data for 2007.

While 10% of workers nationwide held manufacturing jobs, in Elkhart that figure was 48%.

And second place wasn’t even close.

“You could easily make the argument that Elkhart is the least economically diverse area of the nation,” Gledhill said. “It makes you vulnerable.”

“You would have some advantages at the same time, such as being a cheaper place to do business,” Gledhill said. Indeed, labor, taxes and other business costs in Elkhart were only 88% of the national figure, according to the Cost of Doing Business Index from Moody’s Economy.com. And affordable housing is abundant in Elkhart, which had no housing bubble.

It will probably take Elkhart longer than the nation in general to pull out of the recession, Moody’s forecasts. It anticipates unemployment rates of 16.9% for this year, 16.5% in 2010, 14.0% in 2011 and 13.6% in 2012.

“Elkhart’s economy will deteriorate further over the months ahead,” Moody’s economist Jimmy Jean wrote in a February report. Because of the dependence on manufacturing, Elkhart “is expected to be one of the nation’s weakest performers over the forecast horizon.”

It’s not as though times have been hard in Elkhart forever. From 2002 through 2006, the metro area was adding manufacturing jobs.

“It was working for them,” Gledhill said. “But conditions can often change very quickly.”

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