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Posted on Sun. Apr. 12, 2009 - 03:00 am EDT

Economic slide slows for area in 1st quarter

Recovery will depend on auto, steel industries

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At a glance

A sampling of the economic news reported in The Journal Gazette in the first three months of 2009:

EXPANSIONS:

•Kroger Co. announced in January it will build three stores and expand two others in the region and hire 250 employees by 2014.

•BAE Systems Inc. announced in February it will add 200 jobs to its Fort Wayne plant in the next 18 months. The workers will design and make aircraft components. BAE decided to close a plant in Irving, Texas, idling 500 workers.

•Therma Tru Corp. announced in January it will add up to 150 workers at its door plant in Butler. The company decided to close a plant in Oklahoma, putting about 220 out of work.

CONTRACTIONS:

•At least 398 RV workers in Warsaw lost jobs in March, when Monaco Coach Corp. closed a plant there.

•Fleetwood Enterprises Inc. filed in March for Chapter 11 bankruptcy protection. It cut 175 jobs when it closed an Edgerton, Ohio, plant and cut 170 from its operations in Decatur.

•General Motors Corp. announced in March that it placed 240 workers at its Defiance, Ohio, foundry on indefinite layoff.

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The economy continued its slide through the first three months of 2009. But there were several indications that the 15 counties in northeast Indiana and northwest Ohio bled more slowly in February and March than in January.

That doesn’t mean the economy will bloom along with spring flowers, experts say.

An analysis of employment news published in The Journal Gazette indicates about 2,500 workers in the region were laid off indefinitely or permanently in the region between January and March 31. During the same period, area employers publicly announced the creation of about 850 jobs.

The analysis is the first of The Journal Gazette’s quarterly economic scorecards for 2009. While the analysis is based only on employment announcements the newspaper was aware of, it does provide one snapshot of the area economy.

•Of the 14 firms that announced plans to hire, six were retail outlets announcing 514 hires. Of those, 245 positions are temporary.

•Six manufacturers said they are hiring 452 workers. Of those, 350 positions are a result of plant closures elsewhere.

•Of the 16 firms announcing layoffs and cuts, nine are manufacturers saying they’ll eliminate 2,217 jobs, at least temporarily. Of those, 1,624 are permanent cuts.

Total regional employment in January was more than 400,000, according to state agencies in Indiana and Ohio. By February, that number had grown to 420,000, but there were also more people in the regional labor force, which includes people with jobs and those without jobs who are able to work.

Employment numbers for March haven’t been released. Tallying job announcements appearing in the newspaper also doesn’t fully measure how soft the market’s been.

Combined unemployment in Allen, Wells and Whitley counties rose from 9.6 percent in January to 9.9 percent in February. LaGrange County, afflicted with the region’s highest unemployment, saw a drop during the same period, from 17.9 percent to 17.7 percent.

The jobs numbers appearing in the newspaper are anecdotal and incomplete.

And they probably don’t take the full measure of new jobs, said Galen Eberhart, director of the DeKalb County Economic Development Partnership.

“A lot of the job growth has been 20 here, 30 there, 50 here – it’s piecemeal,” Eberhart said.

And with regional unemployment so high – DeKalb County’s was 13.5 percent in February – employers don’t have to publicize much to be deluged with applications, Eberhart said. That means that even Eberhart often doesn’t learn that a company’s hiring until after the fact.

The newspaper’s analysis doesn’t count that 1,500 hourly workers at General Motors Corp.’s Allen County assembly plant were furloughed two extra weeks in March. It also doesn’t consider that more than 400 Decatur employees of Fleetwood Enterprises Inc. have worked less than half their normal hours in each month of the quarter, or that employees of Steel Dynamics Inc. are working only four days a week.

Workers for other companies also are working less than full time.

The good news

After sharp jumps between January and February, the rise in regional unemployment slowed between February and March.

Things even improved in some of the hardest-hit counties. In Defiance County, Ohio, the unemployment rate fell from 14 percent to 13.3 percent.

Also, national automotive sales – upon which much of the regional manufacturing economy depends – weren’t as dismal in March as in the previous two months.

GM’s auto sales were down 45 percent from a year earlier but up 23 percent from February. The improvement, if it can be called that, has been attributed to loosening credit.

And the tonnage hauled by American trucks, an important bellwether of economic activity, rose in February after a precipitous decline a month earlier.

Some manufacturers in the area took important steps to adapt to changes in the regional economy, said Kathleen Randolph, who runs WorkOne Northeast, which administers unemployment benefits and provides job-hunting help in the Indiana part of the region.

“I think we are still experiencing some job losses,” Randolph said. “But some companies are looking to diversify. What’s happened with Big Three has been a catalyst to move forward quickly.”

The same could be said of some suppliers to the slumping RV makers.

Structural Composites of Indiana Inc. makes fiberglass parts for RVs in its Ligonier plant. But as business dropped last year, its workforce fell from 130 to 30.

In the first quarter of this year, though, the company tooled up to make fiberglass covers for trains carrying coal. Co-owner Ken Baranowski says he hopes to hire substantial numbers of workers as business in that sector picks up.

Similarly, many LaGrange County Amish displaced from RV factories are starting small home-based businesses in such fields as woodworking and produce farming.

The bad news

Despite some hopeful glimmers, the regional economy continues to drag.

Steel is another important economic indicator.

Factory orders picked up in March for the first time in four months, said William A. Strauss, senior economist at the Federal Reserve Bank of Chicago. But the increase apparently wasn’t enough to lead to new orders for steel.

Fort Wayne-based Steel Dynamics, the fifth-largest U.S. steel producer, isn’t seeing an uptick, chairman and CEO Keith Busse said March 24. He said there’s “perhaps no light at the end of the tunnel” for the U.S. economy.

Strauss was guarded in his analysis of the regional economy.

“In general, conditions are going lower rather than higher, but the rate of decline appears to be moderating,” he said, adding that he doesn’t expect significant growth until the end of 2009.

How difficult it will be for the region to climb out of the recession depends on what happens to GM and Chrysler LLC, said Peter Ward, chairman of the department of management sciences at Ohio State University’s Fisher College of Business.

GM is likely to make further deep cuts, and Chrysler might liquidate.

GM employs about 1,300 at its Defiance foundry, and many parts makers in the region supply both GM and Chrysler.

Ward noted the region has already lost many automotive-sector jobs.

“Some of those jobs are going to come back with the business cycle,” Ward said. “But depending on what happens with GM and Chrysler, there’s going to be a geographic reckoning.”

Across the region, 25,000 jobs depend on GM alone, according to calculations done last fall by the Allen County Department of Planning Services. That number is likely to be smaller now because GM has since cut workers and production.

mschladen@jg.net


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