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Differing views see hurdles and changes in local economy

Elkhart County's economy is assessed by local business leaders.

Posted on April 1, 2012 at 1:00 a.m.

ELKHART — No one seems ready to exhale.

Most everyone can point to signs of an economic rebound around Elkhart County, with new jobs, business expansions and brightening attitudes about the future, but many are still holding their breath. While they see the community improving, they worry about a number of events and possibilities that could reverse the recovery.

Alex Strati, president for the northern region at Old National Bank, explained the hesitancy that consumers and businesses owners are feeling. The headwinds created by the presidential election and climbing fuel prices are giving people pause but, at the same time, the steady, upward performance of the stock market is giving them confidence about their investments.

Indeed, the bank has budgeted for growth this year, although that growth is anticipated to be modest.

“I really do think we are on the right track,” Strati said. “It’s much better than it was.”

Other professionals in the area hold similar opinions. They, too, believe things are better but challenges remain.

PAIN AT THE PUMP

With gas prices surpassing $4 a gallon and three suppliers hiking the price of their products as a result, Bill Dawson, vice president and general manager at Clean Seals Inc. in South Bend, is fearful another recession could bloom.

“If oil prices keep going up, it will derail what we have done,” he said.

He has met with his employees and prepared them for the possibility that if the economy sinks, everyone will take a pay cut. The smaller paychecks and fewer hours that were the norm during the recession could return if fuel prices drag down the recovery.

What happens at the pump ripples through the entire economy, Dawson noted. Consumers will be putting more money into their gas tanks and have less to spend on clothes, extra food and leisure activities like eating out.

Looking at his Elkhart County-based customers, Dawson believes fuel costs will eventually whack the recreational vehicle industry. Not only will gas crimp how much money consumers have for making a discretionary purchase of a motorhome or travel trailer, it will force manufacturers to pay more for every component that goes into a unit.

“I’m not trying to paint doom and gloom,” he said. “I think the economy is headed up but it’s very fragile.”

Even if the gas crisis eases and the economy continues to strengthen, Dawson doubts Elkhart County will boom like it once did. Still, he admires the work ethic and willingness to change to meet the demands.

“I don’t know of any place that has people like Elkhart County,” he said.

LOOKING FOR WORKERS

The people he sees walking along Middlebury Street in the afternoon draw special admiration from Scott Welch, president and CEO of Elkhart-based Welch Packaging Group Inc. In fact, he said he wants to hug them because they are making the effort to get and keep a job.

Surprisingly in the city with 12.1 percent unemployment, Welch said he is having trouble finding good candidates to fill the 10 to 15 positions he has open locally. Many of the people who submit applications, he said, have work histories that indicate they collect a paycheck until they qualify for unemployment. Then they quit.

“We’re trying to find people who want to work for the next 10 to 20 years and we’re not finding a very big pool,” Welch said.

The problem was common when unemployment was 4 to 5 percent and, after being dormant for the past couple of years, has cropped up again. It has reached such a point that recently Welch called company officials into a brainstorming session to figure out ways to attract people.

Over time, the difficulty finding workers could mean projects will get shifted from the Elkhart plant to Welch Packaging’s other operations across the Midwest. Plants in Cleveland, Chicago and Toledo, for example, Welch said, do not share Elkhart’s unique problem of finding people to employ.

“We have the work if we have the people,” he said.

Despite the employment troubles, Welch wants to keep the Herman Street facility strong. He has invested in new technology and equipment to better serve existing and potential new customers. The local operation has many clients based in Elkhart and it has noticed business activity increasing around the community, which gives Welch hope.

“Optimistically, I feel Elkhart is going to continue to have a good year,” he said. “People are feeling much better today than they did two years ago.

HELPING ON A SHOESTRING

Shana Zehr, interim executive director of Indiana and Families in Transition, is having to cope with a rising need for assistance and a dwindling ability to help. The nonprofit focuses on helping lower-income, lower-skilled residents become self-sufficient through education.

In the down economy, many iFiT clients are struggling even more to become independent. They either cannot find jobs, Zehr said, or the jobs they get do not pay enough to sustain their families.

Compounding the situation, the government funding and private donations that iFiT depends on to provide the programs are being reduced, Zehr said. The agency relies on federal reimbursements to pay for a variety of services for clients like cab fare, prescriptions and rent deposits. These paybacks have declined and are slower in coming, so more than ever, iFiT is needing private donations to cover the shortfalls. However, contributions from local business executives have also decreased, forcing Zehr and her team to reduce the number of people they serve.

Still, Zehr said the organization is not in danger of closing. It is still working with clients and has been asked, and received funding, to expand some of its programs.

“We are still here,” she said. “We are still standing.

Even so, she is not sure the struggles everyone faces will end. A long-time resident of Elkhart County, Zehr doubts the local economy will heal completely.

“I don’t think it will ever get back,” she said. “I don’t think there’s that much industry that can come back.”

SHIFTING PAYMENTS

As executive vice president of retail banking at Lake City Bank, Kevin Deardorff is attuned to consumer spending, moods and concerns. He has noticed people are feeling more confident about the economy as demonstrated by their success in landing middle management and executive positions with salaries to match and their increased applications for car and home loans.

However, coming out of the recession, he has noticed a paradigm shift that he described as one of the most interesting in his 30-plus years in the banking industry.

Prior to the economic disaster, consumers always paid their mortgages first, Deardorff said. Mortgage lending had the least delinquencies as homeowners did not want to lose their house. Payments for other goods and services could wait since keeping a home was traditionally the No. 1 priority.

Now the credit card bill is paid first. During the recession, many consumers found themselves without jobs and dependent on credit cards, and they quickly learned that when they missed a payment, the lifeline provided by credit company would immediately be cut.

So they have adjusted their payment schedules. Credit card bills are on top of the stack and mortgage delinquencies are rising because, Deardorff said, homeowners know a bank takes longer to foreclose on a home than to terminate a line of credit.

Deardorff pointed out that memories get shorter as time goes on, but this recession caused enough pain that people are not forgetting.




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