The Area Development Frontline series offers insight into the innovative strategy being taken by businesses that are succeeding, intelligence on locations that are deploying winning policy to attract investment and talent, and reports on the industry trends that are affecting and shaping the global business climate now and into the future.Many Americans hold fond memories of spending their summer vacations traveling the country in recreational vehicles (RVs) - from pop-up trailers tethered to the back of the family station wagon to fully equipped homes on wheels with complete kitchens and bathrooms. For more than 60 years, the northern part of Indiana - particularly Elkhart County - has been known as the RV capital of the world, with the majority of the industry's manufacturing taking place there. But the recession brought a severe downturn to the industry and record-high unemployment to the area. In recent months, though, an increase in demand for RVs has prompted manufacturers to begin rehiring - and that's lit a spark under the regional economy.
Elkhart County - including the cities and towns of Elkhart, Goshen, Middlebury, Nappanee, and Wakarusa - and neighboring counties such as Miami and Kosciusko have become RV manufacturing hubs in large part due to the available work force in the area. "We have many workers who are skilled in the kind of teamwork needed to assemble a quality RV quickly," says Kyle Hannon, vice president for public policy and media relations at the Greater Elkhart Chamber of Commerce. "Elkhart County is noted as leading the nation in teamwork manufacturing."
RV production in northern Indiana peaked at 390,500 units in 2006, according to a December 2009 article in the Indianapolis Star. Two years of falling shipments followed, reaching a nadir of 150,000 units as of November 2009. As production plummeted, unemployment in the area rose. The U.S. Department of Labor reported Elkhart County's peak unemployment at 18.8 percent in March 2009 - a dramatic increase from the 4.7 percent of a year earlier, and one of the highest rates in the United States.
Elkhart became a national symbol of the recession in February 2009 when President Barack Obama visited the area to call attention to the plight of the unemployed. "They can't pay their bills and they've stopped spending money," he said at a press conference following the Elkhart trip. "And because they've stopped spending money, more businesses have been forced to lay off more workers. In fact, local TV stations have been running public service announcements that tell people where to find food banks, even as the food banks don't have enough to meet the demand."
But nearly as quickly as the crisis hit, the RV industry has made a dramatic turnaround. According to the Star, industry analysts are predicting a 25 to 30 percent increase in RV sales in 2010, with the Recreational Vehicle Industry Association (RVIA) expecting 190,000 units shipped. "The nadir in this industry is definitely behind us," said Richard Riegel, CEO of Thor Industries, in a November 2009 Wall Street Journal article. Thor, which operates several manufacturing facilities in the Elkhart area, is the nation's largest RV maker by sales and owns the brands Four Winds, Airstream, and Dutchmen, along with seven others. Riegel told the Journal the company is hiring again and would have two new factories open by the end of 2009.
Other RV companies in the area have begun hiring as well. In Middlebury, Jayco Inc. has hired or rehired more than 200 workers to handle its largest order backlog in more than two years. "It has become increasingly clear that 2009 will end better than we had expected, and we are encouraged by our prospects for business in 2010 - our business plan anticipates a substantial increase in sales next year," says Derald Bongrager, Jayco's president and CEO. Heartland Recreational Vehicles of Elkhart held a job fair in December 2009 to fill 200 new positions, and plans to hire 200 more by March 2010. And in Peru, located approximately 70 miles away from Elkhart in Miami County, Riverside Travel Trailer plans to hire 100 new workers by the second quarter of 2010. "The RV industry is entering a recovery phase, and it is here to stay," says Mark Gerber, Riverside's vice president of sales and finance.
With the RV industry resurgence, the unemployment rate in Elkhart County has dropped to 14.9 percent as of the October 2009 report (the most current available at press time), and Hannon says he expects the figure to drop dramatically within the next few months. "The turnaround in the RV industry is what will make our unemployment rate drop because they usually hire hundreds of people at a time," he says. He also emphasizes that there are other manufacturing industries in the Elkhart area - including companies that make components for RVs. "The RV companies tend to be the larger employers, so the other industries are overshadowed," he says.