A city struggles: ‘We are back at square one’

Kari Huus Reporter • Profile • E-mail

ELKHART, Ind. - When the economic crisis hit here, it touched down with the force of a tornado. Tammy Gambill's job, then her husband’s, were swept away along with thousands of others in the recreational vehicle industry.

“Here I am, 41 years old, and my husband is getting ready to turn 40, and we are back at square one,” said Gambill, who worked 20 years in the RV industry. Now she is scraping by on partial unemployment benefits and a minimum-wage, part-time job and taking classes to learn insurance coding. She and her husband have given up on buying a three-bedroom home through a lease-to-own agreement. “The money is gone … Now the assets we have go to renting a one-bedroom apartment and a storage unit.”

In a sense, the entire community is hitting the reset button. With the virtual collapse of the RV industry, long the mainstay of the economy, nearly 20 percent of workers in the area are unemployed, about triple the number a year ago. Meantime, the jobless benefits system, food banks and emergency assistance programs are struggling to meet demand, and home foreclosures are climbing. Elkhart and Elkhart County — dubbed the “RV Capital of the World” — are scrambling to attract new industries and to retrain its workforce for new occupations. The task is more daunting amid a national economic crisis.

“We’ve not had to do it, and I guess you don’t do things when you don’t have to,” said Elkhart Mayor Dick Moore. “I think we’ve learned a lesson, and we’ve learned that we’ve got to be more diversified in the industry here.”

Lucrative habit, hard to break
The town has had a good ride with the RV industry, so there has been little incentive to change up to now. Dozens of RV companies — making everything from tiny tag-a-long trailers to $1 million custom-made motor homes — and their suppliers have been the biggest source of jobs — offering a path to a middle-class lifestyle to workers right out of high school and making RV titans of the most resourceful. The industry accounted for about 25 percent of the total economy in Elkhart.

When demand was strong and financing flowed, dealers were able to fill their lots with RVs using lines of credit. But soaring gas prices and then the credit crunch dealt the business a swift one-two punch. With investments and home values in a continued slump, many middle-class Americans who might have felt wealthy enough to buy an RV have lost their appetite for big-ticket purchases.

In the past year, at least a dozen RV plants have shut down in the Elkhart area, shedding thousands of workers. The precise number of local jobs lost is unknown, but the Recreational Vehicle Industry Association estimates that the overall RV industry employed an estimated 530,000 directly and indirectly in June 2007, and that 53 percent of those workers had been cut by November 2008. With approximately 60 to 65 percent of all RVs manufactured in the northern Indiana-southern Michigan region surrounding Elkhart, that would work out to approximately 168,000 jobs.

Those layoffs have rippled through the economy, hitting retailers and restaurants. And week after week, factories and everything in them have gone on the auction block: piles of caulk guns, screen doors, forklifts and office furniture selling at pennies on the dollar. Steven Petitt, a broker for commercial real estate giant CB Richard Ellis, says that of an estimated 80 million square feet of industrial space in Elkhart County, more than 9 million square feet is listed for sale. And that doesn’t include properties for sale by owner or just standing idle.

For many people here, it is an article of faith that Elkhart will pull through this crisis as it has in past slumps — that although it entered the slump earlier than other places in the country, it will emerge earlier as well, and more robust than before. But this time, some experts warn, Elkhart should not count on it.

“The long-term prospects for the RV industry are very, very uncertain,” said Michael Hicks, director of the Center for Business and Economic Research at Ball State University in Muncie, Ind. He cites the glut of unsold RVs, the lasting psychological impact of $4 per gallon gas and the likelihood that when the economy does recover, the cost of fuel will increase again. “I think it’s going to be very difficult to create the jobs that were lost in the RV industry, sad to say. That's the tough medicine.”

MORE FROM THE ELKHART PROJECT

The Elkhart Project Section Front

Suicides raise worries about recession’s real cost Guardsmen now in battle to find jobs U.S. stimulus buoys U.K. factory’s workers Blog: Recession raises bar on inmate releases Blog: Tax delinquencies nearly triple RV worker rebounds, cautiously Blog: Elkhart County jobless rate dips again Elkhart union, and workers, are left broken Recession ends in 79 metro areas, including Elkhart Blog: Local economy recovering, but no celebration The Elkhart Project Section Front   Add The Elkhart Project headlines to your news reader: