Expansions drive region forward

February 16th, 2012

News Coverage:

Expansions drive region forward

LINDA LIPP - lindal@fwbusiness.com

Thursday, Feb. 16, 2012 at 10:41am

If companies keep the investment and job creation promises they made in 2011, it will go down in the books as the best year in a number of years for northeast Indiana.

Not only were there an impressive number of announcements — particularly expansions — in the 10-county region, there were some impressively sized projects, according to the annual Business Dynamics report completed by the Community Research Institute at Indiana University-Purdue University Fort Wayne for the Northeast Indiana Regional Partnership.

As a region, new and expanding companies added or pledged last year to add 4,264 jobs in the area that includes Adams, Allen, DeKalb, Huntington, LaGrange, Noble, Steuben, Wabash, Wells and Whitley counties.

Closings and downsizings, including the much publicized “phase-down” at Navistar International Corp.’s facilities in Fort Wayne, cost 1,174 jobs. That left the area with a net gain of 3,090 jobs.

Layoffs, which may or may not be permanent, accounted for another 182 job cuts that are not included in the above totals.

What was noteworthy in 2011, as in 2010, was the relatively small number of jobs lost compared with the number of jobs created, said Community Research Institute Director John Stafford.

The area has done pretty well in terms of jobs created over the past four years, increasing slowly but steadily, “but in both 2010 and 2011 there was a dramatic reduction in what I would call downturn events,” Stafford said.

Among the most notable project gains in 2011 were:

• a $283-million expansion at General Motors Co.’s Fort Wayne Assembly Plant southwest of Fort Wayne, which is expected to add 100 jobs;

• the $70-million Family Dollar Stores Inc. distribution center in Ashley that should create 350 jobs;

• the new R3 Composites Corp. operation, which is moving into the former Meridian Automotive plant in Grabill. An investment of $4.5 million is expected to create 400 jobs; and

• the $36-million General Mills Inc. distribution center on Bluffton Road south of Fort Wayne, expected to create up to 65 new jobs.

The wealth, so to speak, was pretty well distributed around the region, with eight of the 10 counties welcoming at least one new business in 2011, and Noble County getting a new business as a result of an intra-northeast Indiana move.

There were 18 new company announcements in 2011, the CRI report calculated, and 139 expansions. Six companies moved from one county to another within the region, and four of those involved an expansion of the work force.

“We got a grand slam in attractions last year,” said John Sampson, president and CEO of the regional partnership. “But the big winner every year is going to be about expansions and growth of existing companies. We’re going to get the attractions, but the thing we spend the most time on is expansions.”

Total investment in new and expanding business projects announced last year was expected to be almost $870 million. That included the GM project, the area’s largest single project in terms of dollars.

“GM skews all these numbers. The investment number is huge,” Stafford noted. “It’s like the Parkview North project a couple years ago, which was even larger.”

The last two years really have seen manufacturing bounce back in northeast Indiana.

“I think the real question is, over the next three or four years, how close will we get to prerecession numbers?” Stafford said.

Given that the area was losing manufacturing jobs even before the last recession, between 2001 and 2007, it probably won’t get back all the lost jobs, he speculated. That doesn’t mean the winning streak has ended.

“If we look at national economic numbers, we should be in for an increase in 2012,” he said. Most of the gains will come from existing manufacturers.

“As demand picks up, I would expect there would be callbacks,” Stafford said.

The Community Research Institute report focuses on bigger events, where a tax abatement is granted, a local economic development organization makes an announcement or a Worker Adjustment and Retraining Notification Act notice is filed in anticipation of job losses. It doesn’t cover retail business, and it usually doesn’t capture the numerous small job gains and losses experienced by businesses in the region.

“Trying to measure the churn in things that are not noticeable events is extremely difficult,” Stafford said.

The regional partnership has identified six major areas as regional strengths — defense, finance, food processing, logistics, medical devices and vehicle manufacturing — and concentrates much of its business attraction and retention efforts on those industries.

Over the years, it has refined those targets a little, deciding to focus primarily on specialty insurance rather than all banking, insurance and finance; and in 2011, to concentrate on vehicle manufacturing as opposed to all manufacturing.

“The difficulty we always had with manufacturing is it’s so broad,” Sampson explained. “Everyone claims expertise in advanced manufacturing.”

While the report continues to track all manufacturing projects, it provides additional analysis of those in vehicle manufacturing and other target areas.

Many of the jobs companies promised last year to create will be phased in over a period of a few years. If 2011 follows the pattern of other years, not all of those promises will be kept.

Terex Advance Mixer, for example, was granted a tax abatement for a 2006 project that, the company said, would allow it to retain 228 jobs and create another 75.

A 2010 compliance report filed with Allen County noted it had exceeded its investment projections, but had created no new jobs and in fact had only retained 89 people. In 2011, Terex Advance Mixer showed up in the Business Dynamics report’s loss column when it cut 53 more jobs, most of its remaining work force.

Vera Bradley Inc., which last year acquired the former Baekgaard Ltd. building and said it would expand again, adding another 101 jobs, also has fallen short on previous pledges, according to Allen County abatement compliance filings. It not only invested several million dollars less than expected in the 2008 construction of a new distribution center, it created just one-third of the jobs it had projected.

It will take a year before the new jobs created by 2011 projects really start to show up in U.S. Bureau of Labor Statistics data, and there’s no way of knowing until then whether the wages they generate will help raise the area’s sagging median income, Sampson also noted.

In the meantime, the partnership and its member local economic development organizations will not be sitting on their laurels.

“We had a good year, and we should celebrate it, but that doesn’t mean we’ll have a good year in 2012,” Sampson said. “It’s so competitive … if we think we have arrived, there’s someone out there working harder and faster and smarter.”