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Fractured Economy in Northeast Indiana on the Mend

October 13, 2009 by · Leave a Comment 

The health of the northeast Indiana job market is on the mend after months of suffering more acutely than the rest of the country.

In the three months ended Sept. 30, employers in northeast Indiana and northwest Ohio announced plans to add 1,080 more workers than they planned to cut, according to a quarterly analysis by the Journal Gazette, Fort Wayne, Ind.

It’s the third such analysis this year and the first to suggest a net gain of jobs in the 15-county region.

As in the previous two quarters, manufacturing was the dominant sector in the most recent economic scorecard. Big announcements at two of the region’s manufacturing powerhouses accounted for 1,000 of the 1,670 jobs that employers promised to create.

General Motors Co. announced last month that with the closure of a truck plant in Pontiac, Mich., it would add a third shift at its Allen County assembly plant, bringing 700 jobs to the region by April.

And after a private-equity firm brought Fleetwood RV Inc. to decatur, Ind.,  it announced in August that it would add 300 jobs to its workforce of 630 by mid-November.

The analysis is based on announcements of which  the newspaper was already aware, but it does provide a snapshot of the area economy. And John Stafford, director of the Community Research Center at Indiana University-Purdue University Fort Wayne, said the numbers jibe with statistics his agency is compiling.

“We’re just measuring audible sound,” he said, explaining that many smaller job decisions probably aren’t publicly announced.

Even so, the numbers reflect a tentative recovery in a regional manufacturing economy that fell further and faster than other sectors did.

In the first three months of 2009, companies announced 2,500 layoffs or cuts and 850 hires. In the second quarter, 4,560 layoffs and cuts were announced, compared with just 512 hires.

The region and the entire Midwest lost manufacturing jobs this year as companies cut production more quickly than sales plummeted, cutting deeply into inventories, said William A. Strauss, a senior economist at the Federal Reserve Bank of Chicago who compiles the Midwest Manufacturing Index.

“I think the financial crisis hit manufacturing more heavily than it did other parts of the economy,” Strauss said.

Car and truck sales, for example, fell 27 % in the first eight months of 2009 compared with the same period of 2008. But production was slashed by 46%, Strauss said.

The recession and tighter credit markets made it difficult for consumers and small manufacturers to get loans and do business. And it helped tip some huge companies – such as General Motors Corp. and Fleetwood Enterprises Inc. – into bankruptcy.

Auto sector’s shifts

The 2,600 workers at the Allen County truck plant were idled for 10 weeks starting in May as bankrupt GM struggled to reduce inventories. But after the new General Motors Co. emerged from bankruptcy court in July, inventories fell further than expected, thanks in part to the federal ”Cash for Clunkers” program.

In July, GM announced it would spend $46 million retooling the Allen County plant so it could make heavy-duty pickups. In August, GM said it was cranking up production in Allen County and at its Defiance, Ohio, foundry. Then in September, GM said it was adding a 700-employee third shift in Allen County.

Many of the new workers at the plant will come from the roughly 1,000 who lost jobs this month when GM closed its truck plant in Pontiac, but it still will be a boon to the regional economy.

Even though the biggest news in the regional job market for the quarter is the new auto industry jobs, the sector also accounted for the biggest losses.

GM announced in August that 175 workers – 115 in Allen County and 60 in Defiance – took advantage of a second round of buyouts offered this year to employees.

And in July, parts maker Meridian Automotive Systems Inc. closed its Grabill plant, putting 120 out of work.

For Fleetwood, orders have steadily grown since summer, said John Draheim, president of the new Fleetwood RV. The problem has been in getting parts.

“The supply chain has been fractured,” he said.

While most firms that directly supply Fleetwood made it through the downturn, some suppliers didn’t, causing disruptions.

“Occasionally we have to take some down days to let them catch up,” Draheim said.

Even so, Fleetwood’s staffing was “a little bit north of 850” last week and growing, Draheim said.

The third-quarter’s third-largest job addition also was in the RV industry. Sweden-based Dometic LLC announced it would move 116 jobs from Mexico to LaGrange, Ind., by 2012 to make retractable RV awnings.

Confidence grows

Overall, the net additions to the regional workforce in the third quarter were modest compared with the losses announced earlier in the year. Fleetwood, for example, likely will finish 2009 with about 400 fewer workers in Decatur than it had in 2007.

And some huge losses might loom. Navistar Inc. is considering buying an office complex in Lisle, Ill. Navistar won’t say whether it’s thinking about moving more than 1,000 well-paying jobs there from Fort Wayne, but the company has told Lisle officials more than half the 3,500 office employees would come from out of state.

Other than Fort Wayne, the only city where Navistar has a sizable white-collar operation is Knoxville, Tenn., where it employs 89, according to the company website.

But as the Federal Reserve’s Strauss meets with business leaders throughout the Midwest, he said things are slowly getting better.

“There has been a very significant change in terms of business confidence,” he said.

Jeff Rohyans of New Haven also is more confident. In January, he was laid off from the Parker Hannifin plant in New Haven. He drew unemployment for six weeks before going back to Parker Hannifin on temporary status in April and then moving to a temporary job at steel fabricator Almet Inc. in June.

He took more than a $3 hourly pay cut from the $14 an hour he made at Parker Hannifin. But after commercial construction starts to recover, Rohyans, 35, expects to be made permanent at Almet and to get the insurance and other benefits that come with it.

Judging from the train traffic he’s seen through New Haven, Rohyans said he feels the economy is on the mend.

“I like to use the phrase ‘cautiously optimistic,’” he said.

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