ELKHART — While local business leaders express a sense of caution mixed with optimism, the new regional president of one of the nation’s largest banks sees plenty of long-term opportunity for the local economy.
Doug Wood, a Granger resident who serves as PNC Bank’s regional president for Northern Indiana, said, “I really am an optimist when it comes to the progress that’s been made here in the last five years, specifically in Elkhart.” He called the number of jobs announced by Elkhart County employers for the next few years “phenomenal,” and said the moves by Thor Industries and Drew Industries to move their headquarters to Elkhart County are great things for the community.
Wood said PNC has a unique view on the local economy. They focus on the large “middle market” of businesses, and their mix of 60 percent manufacturing customers and 40 percent service customers is close to Elkhart County’s near 50/50 split between those major sectors.
“They allow us into their planning phases and understanding of their business models,” Wood said. “There’s been, I would call it, a cautious optimism the last three years,” he said.
Business leaders remember the depths of the recession, though, a recession which hit here harder than anyplace else in the country.
“We’ve seen, from a borrowing standpoint, a flat borrowing curve. Even though it’s easy money in terms of low interest rates, we haven’t seen the demand typically you would see coming out of a cycle, particularly as dramatic as this. But it’s been steady nonetheless,” over the last three years, he said. “The owners and executives are picking their spots, but they are executing.”
On the service side, the restaurant industry especially remains soft, Wood said. That could be a mixture of the January rise in payroll taxes and overall economic uncertainty, which Wood said is widespread.
People continue to pay down debt, which he said could be a generational change. “Even though debt is relatively cheap, people could be starting to say, ‘I don’t need as much as I needed a decade ago,’” he said.
While the stock market has rebounded, the other major indicator of economic security, the housing market, hasn’t rebounded, Wood said. “That’s always been a huge driver of jobs. Housing decisions are just not being made like they were before the downturn. Mortgage rates are at an all-time low, you’d think people would want to take advantage of those,” he said. While people are re-financing and remodeling, they’re not building much, he said.
Many hiring decisions have been pushed back by the election, then the fiscal cliff, then the sequester, and now by concerns about Obamacare’s impact next year. “It always seems that each quarter has something looming keeping that employer from making that proactive hire,” Wood said. “Nobody wants to be caught too far out there with a personnel strategy or a staffing strategy until they understand it.’’
Instead, employers are trying to do more with less, dealing with employment lags due to the questions about the economy’s future, Wood said. “We really don’t know what cycle we’re in right now. Everybody’s trying to figure that out. Are we coming out of this? Are we going back in? Are we slipping sideways?
With all of that, though, there are good signs for the manufacturing side of Elkhart County’s employment picture.
“Nationally, manufactruing is probably for the first time in a long time experiencing some resurgence. Ten years ago the talk was of jobs going overseas, saying manufacturing will never return. What’s coming out of this last decade is there’s so much creativity and ingenuity in this country, you just can’t outsource all of that out. Just because you can have cheaper labor, in theory, doesn’t mean that it’s going to allow you to grow your products,” Wood said.
Inflation, commodity and fuel prices all remain in check. Locally, there’s a strong regional push for economic growth and area manufacturers have stronger balance sheets than in the past.
And in the RV industry, heavily concentrated here, the demographics look good, with baby boomers just starting to reach retirement age. “What’s going to be interesting is to see where the industry will evolve over the next 20 years.”
In the short term, eliminating some uncertainty could help local businesses and give them confidence to hire more people, Wood said. “All executives ever ask for is, ‘Tell me what it is, tell me the impact and I’ll figure out my 3- and 5-year plan from that.’”