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Mon March 5, 2012

As Elkhart's Electric Dreams Fizzle, RVs Come Back

Originally published on Tue March 6, 2012 9:13 am

Elkhart, Ind., is known as the RV capital of the world. The city suffered badly when the recession hit and demand for recreational vehicles all but screeched to a halt. That's when local and state leaders started looking for ways to bolster the area's manufacturing industry.

The unemployment rate in the city along the Michigan border eventually soared to 20 percent — the highest in the nation at the time.

Electric cars were supposed to help revive Elkhart's economy. President Obama visited twice, promising stimulus funds to spark a new economic engine in electric vehicles. Those jobs never materialized. But like other hard-hit factory towns in the Midwest, Elkhart is starting to improve. And its RV industry is leading the way.

A Car Factory With 2 Employees

From the outside, Elkhart's Think Electric Vehicle factory looks deserted. There isn't a single car in the parking lot; the doors are all locked; the windows are dark.

It's not until you wander all the way around to the back of the 200,000-square-foot facility that there is a sign of life: one door left slightly ajar. Inside, several-dozen brightly colored, tiny electric cars sit in neat rows.

"All these cars are finished," says Rodney Smith, plant supervisor for Think EV. Pointing at cars that are painted red, blue and black, he says, "They're all finished and ready to go; we could hop in one of these and go down the road right now."

There are about 120 of these road-ready models, called the Think City — a little two-seat fully electric coupe that has a range of about 100 miles before it needs to be recharged.

"It's fun to work on," Smith says of the City car. "They're good little cars. They run great."

But at the plant, there are 32 more cars that are not yet fully assembled, he says. They're waiting for parts to come in; as components arrive, Smith and another worker finish putting the cars together.

"That's currently what we're doing; we're just in a standby position," he says. "We're continuing to sell cars. We're continuing to produce cars. It's just the two of us that are here."

That's right — just two employees are working in this auto plant. At its peak, the plant employed 25 workers. Then two waves of layoffs dropped the payroll down to just two people. It's a far cry from the more than 400 people the Think company promised it would hire two years ago.

Betting On A Boom In Electric Cars

Backed by federal stimulus funding, state development grants and tax credits, Think announced plans to produce thousands of electric cars in Elkhart annually.

Other companies lined up to make electric cars and trucks, and their parts, too, as Elkhart County, a place long known for producing gas-guzzling recreational vehicles, set out to jump-start its flat-lining economy with electric vehicles.

During his State of the State address in 2010, Indiana Gov. Mitch Daniels said, "Our goal is to be the capital of this potentially massive industry of tomorrow."

But two years later, Elkhart's electric buzz has gone all but bust. Two local electric startup companies never got off the ground. Navistar is manufacturing short-range electric delivery trucks, but not yet at the level the company had hoped.

And the Think plant has delivered only about 200 electric cars, many of them to government fleets. The parent company, Think Global of Norway, filed for bankruptcy last summer.

"The results were not anywhere what they thought they would be," says Elkhart Mayor Dick Moore. "We were looking at investment of, I think, $4.5 million in real property, about $55 million in personal property, and 415 jobs. None of that has taken place."

Even those interested in driving small and quiet electric vehicles have concerns about the battery life and range, as well as the cost. The Think cars are rather expensive for such a tiny little thing — more than $40,000, before government tax credits and incentives.

"Perhaps we as Americans just can't get over the enjoyment, the love that we have to get behind the wheel of a big powerful automobile," Moore says. "Maybe that's a part of our problem, I don't know."

There has not been much good news for backers of electric vehicles lately. Last week, GM announced it will idle production of its Chevy Volt for five weeks. And Bright Automotive announced it would shut down operation at a plant in Anderson, Ind. The company had planned to develop a lightweight electric plug-in truck and hire up to 300 workers in Anderson.

That news came a month after an Indianapolis company that makes batteries for electric vehicles, Enerdel, filed for bankruptcy.

As Electrics Struggle, RVs Surge Anew

In the meantime, Mayor Moore and many others in Elkhart are heartened by a rebirth of sorts in the industry that some here thought might never bounce back: the RV business.

"Rumors of our demise have been greatly exaggerated," says Gregg Fore, president of Dicor Corp. Its companies supply components to RV manufacturers.

Fore says the industry's downturn was brutal, with business falling off close to 60 percent. But demand for RVs has come back strong, he says. Last year, the industry produced more than 250,000 RVs. That's 100,000 more units than the low-water mark in 2009.

"People forget the deep roots of our industry. They don't remember we've been here for as many years as we've been here — a hundred years," says Fore, who is also chairman of the Recreational Vehicle Industry Association.

Dicor's factories are once again humming — and hiring, he says. And Fore believes the market for motor homes, travel trailers and campers is here to stay.

"People are still going to enjoy the lake, their kids, their relatives, the other campers, their beer, their ballgames, their hot dogs," he says. "That's the way it's going to be."

The RV industry has learned some lessons from the deep recession, Fore says. Companies now offer more lower-cost models, as well as lightweight, fuel-efficient and "green" RVs.

But one thing that hasn't changed, he says, is that the fortunes of Elkhart and its 51,000 residents still live or die with the fortunes of the RV industry.

Just how reliant is this area on the RV industry? Consider this: Nearly half of all the jobs in Elkhart County are in manufacturing. In fact, no county in the country has a greater share of its jobs in manufacturing. And fully half of Elkhart County's manufacturing jobs are in making RVs and their parts.

Hurt Feelings, And Low Wages

Despite the obvious differences between RVs and EVs, turning to electric vehicles as a way to try to diversify the Elkhart-area economy made sense.

"It was a risk," says Dorinda Heiden-Guss, president of Elkhart County's Economic Development Corporation. But, she adds, at the time, it was a risk worth taking.

"We were the highest unemployment rate in the entire country. We did not have any other opportunities of this significance that we were pursuing at the time, [and] it was being touted and reinforced by the federal government."

Heiden-Guss and others hope Indiana-made electric cars can still take off, but the heavy focus on this new, unproven industry rubs some in Elkhart the wrong way.

"It didn't work out. It's obvious it didn't work out," says Michael Pierce, an account manager for a supplier to the RV industry.

Enjoying a beer and a burger at a popular Elkhart bar called Wings Etc., Pierce says, "You know, the president comes here and, no disrespect to the president, but when you got the leader of the whole country here, and he's promising this and promising that, and it doesn't happen, it's pretty disheartening."

To be fair, the Obama administration delivered the grants local companies wanted to kick-start electric vehicle production; it's the companies that haven't delivered the jobs.

And others say Elkhart needed to try something new. They point out that even as the RV industry begins to recover, many family pocketbooks have not.

Mark Elliott, who works in maintenance in a manufacturing plant, says he's discouraged by something else.

"I think the problem with our economy here is the jobs are coming back, but the wages is almost cut in half, am I right?" he says. "I mean, you had a job at $1,200 a week, and you're going back at $600 a week — so what good did that do you?"

The ripple effect of that is that bars such as this and other businesses around Elkhart aren't as busy. And tips for waitstaff and bartenders aren't as generous.

Others around Elkhart say that while there are many fewer people out of work now as the RV industry bounces back, they remain nervous about the future — and wary that the economy could tank again.

Copyright 2013 NPR. To see more, visit http://www.npr.org/.

Transcript

RENEE MONTAGNE, HOST:

The city of Elkhart, Indiana is known as the RV capital of the world.

STEVE INSKEEP, HOST:

Not such a great thing to be three years ago, when the recession hit and demand for recreational vehicles came to a screeching halt. Elkhart saw its unemployment rate soar to 20 percent, which was the highest in the nation at that time.

MONTAGNE: President Obama has gone to Elkhart twice, promising stimulus funding to kick-start the manufacturing of electric vehicles. As NPR's David Schaper reports, those jobs haven't materialized, but the economy of Elkhart is slowly recovering.

DAVID SCHAPER, BYLINE: From the outside, the Think Electric Vehicle factory in Elkhart, Indiana looks deserted. There's not a single car in the parking lot. The doors are all locked, the windows dark. It's not until you wander all the way around to the back of this 200,000-square-foot facility that there's a sign of life: one door left slightly ajar. And inside, several dozen brightly colored tiny electric cars sit in neat rows. Rodney Smith is the supervisor of this plant for the company Think EV.

RODNEY SMITH: All these cars are finished.

SCHAPER: All of these? The red and the black ones?

SMITH: Red, blue and black - they're all finished and ready to go. We could hop in one of these and go down the road right now.

SCHAPER: There are about 120 of these road-ready models, called the Think City - a little two-seat, fully electric coupe that has a range of about 100 miles before it needs to be recharged. Smith says there are 32 more cars yet fully assembled, waiting for parts to come in. When they do, he and another worker finish putting the cars together.

SMITH: That's currently what we're doing. We're just in a standby position. And we're continuing to sell cars. We're continuing to produce cars. It's just the two of us that are here.

SCHAPER: That's right, just two employees work in this auto plant. It's a far cry from the more than 400 people the Think company promised it would hire two years ago. Backed by federal stimulus funding, Think announced plans to produce thousands of electric cars in Elkhart. Other companies promised to make cars and trucks and their parts here, too, as Elkhart County set out to jump-start its flat-lining economy with electric vehicles.

GOVERNOR MITCH DANIELS: Our goal is to be the capital of this potentially massive industry of tomorrow.

SCHAPER: That's Indiana's Republican governor Mitch Daniels in his 2010 State of the State address. But two years later, Elkhart's electric buzz has gone all but gone bust. Some of the start-ups never started up. There are batteries and electric trucks being made, but at nowhere near the level anticipated. Think has only sold about 200 of the cars assembled at Elkhart, while its parent company, Think Global of Norway, filed for bankruptcy last summer.

MAYOR DICK MOORE: They're still here, but the results were not anywhere near what we thought they would be.

SCHAPER: That's Elkhart Mayor Dick Moore.

MOORE: I thought there could be a thousand jobs in that plant as this thing took off.

SCHAPER: Clearly, that hasn't happened.

MOORE: Perhaps, we as Americans just can't get over the enjoyment and the love that we have behind the wheel of a big, powerful automobile. Maybe that's a part of our problem. I don't know.

SCHAPER: But even those interested in driving small, quiet electric vehicles have concerns about the battery life and the range, as well as the cost. The Think cars are rather expensive for such a tiny little thing, more than $40,000 before government tax credits and incentives. Think has a troubled financial history, too, and faces growing competition in the electric car market. Meanwhile, there's been a surprisingly strong rebirth of sorts in what had been a moribund industry making recreational vehicles.

STEVE BOWEN: This is a one-of-a-kind machine.

SCHAPER: Steve Bowen is showing off a new saw that is cutting pieces of composite siding for RVs on the floor of the Vixen Composites factory in Elkhart.

BOWEN: We make a lightweight composite panel. We can paint it any color you want it. We can cut it any size you want it.

SCHAPER: Demand for such RV components is up, and many factories in and around Elkhart are humming once again and hiring.

GREGG FORE: Rumors of our demise have been greatly exaggerated.

SCHAPER: Gregg Fore is president of Vixen's parent company, the Dicor Corporation, and is always chairman of the Recreational Vehicle Industry Association. Fore says the industry's downturn was brutal, with business falling off close to 60 percent. But demand for RVs, he says, has come back strong. Last year, the industry produced more than 250,000 RVs. That's 100,000 more units than the low-water mark in 2009. And Fore believes the market for motor homes, travel trailers and campers is here to stay.

FORE: People are still going to enjoy the lake, their kids, their relatives, the other campers, their beer, their ballgames, their hot dogs. That's the way it's going to be.

SCHAPER: Among the lessons of the deep recession: RV manufacturers now offer more lower-cost models, as well as more lightweight, fuel-efficient and green RVs. But one thing that hasn't changed, says Fore, is that the fortunes of this city of 51,000 just south of the Michigan border are intricately linked to this one industry. How much so? Consider this: Nearly half of all of the jobs in Elkhart County are in manufacturing. In fact, no county in the country has a greater share of its jobs in manufacturing than Elkhart. And fully half of the manufacturing jobs here are in making RVs and their parts. Turning to electric vehicles to try to diversify the economy made some sense, as Elkhart is centrally located, has plenty of factory space, a supply chain in place and a ready workforce.

DORINDA HEIDEN-GUSS: It was a risk.

SCHAPER: But Dorinda Heiden-Guss of Elkhart County's Economic Development Corporation says at the time, it was a risk worth taking.

HEIDEN-GUSS: We were the highest unemployment rate in the entire country. We did not have any other opportunities of this significance that we were pursuing at the time.

SCHAPER: Heiden-Guss and others hope Indiana-made electric cars can still take off, but the heavy focus on this new, unproven industry rubs some in Elkhart the wrong way.

MICHAEL PIERCE: It didn't work out. It's obvious it didn't work out.

SCHAPER: Michael Pierce is an account manager for a supplier to the RV industry, enjoying a beer and a burger at a popular Elkhart bar called Wings Etc.

PIERCE: You know, the president comes here - and no disrespect to the president, but, you know, when you got the leader of the whole country here and he's promising you this and promising you that and it doesn't happen, it's pretty disheartening.

SCHAPER: Actually, the administration delivered what it promised: grants to companies wanting to make electric vehicles. It's those companies that haven't delivered the jobs. And others say Elkhart needed to try something new as the economy here still suffers. On Friday nights like this one, Wings used to be packed, with a line out the door. But on this night, there are still several empty tables. Mark Elliott, who works in maintenance in a manufacturing plant, says the recent uptick in Elkhart is somewhat disappointing.

MARK ELLIOTT: I think the problem with our economy here is the jobs are coming back, but the wages is almost cut in half, am I right? I mean, you go back from - you had a job at 1,200 a week, and now you're going back to 600 a week. So what good did that do you?

SCHAPER: And others around Elkhart say while there are now many fewer people out of work, they're still nervous about the future. With gas prices headed up, they worry that the RV industry, and thus the economy here in Elkhart, could tank again. David Schaper, NPR News.

(SOUNDBITE OF MUSIC)

MONTAGNE: This is NPR News. Transcript provided by NPR, Copyright NPR.