In a City With a (Barely Beating) Heart, Recovery Awaits
“I promised you back then that if elected, I’d do everything I could to help this community recover, and that’s why I came back today—because I intend to keep my promise.”
—President Obama in Elkhart, Feb. 9, 2009
ELKHART, Ind.—Terry and Desiree Gonyon wonder if this will be the last night in their home. They stand in the kitchen of their old brick house and eat frozen thin-crust pizza. When the recession swallowed this town, construction jobs dried up for Terry. The couple fell behind on their mortgage. In January, the bank foreclosed.
Fed up with begging for a lower monthly payment, Terry got some metal and wood and erected a sign:
GOVERNMENT BAILOUTS DON’T WORK.
WE LOST THIS HOME.
FAMILY WITH 9 CHILDREN PUT OUT.
It was his way of expressing the desperation that’s whipped through this city two hours east of Chicago. Since President Obama launched his stimulus plan here in February, Elkhart has become a proving ground for his promise of economic recovery.
But two months later, the unemployment rate remains at 20 percent, having tripled in less than a year. The first infrastructure project has yet to begin. And many residents doubt the stimulus will help.
Signs of the crisis are everywhere.
The line to file unemployment claims at the library stands 50 deep before it opens. The grocery store advertises Manwich on sale, 10 cans for $10. A new church has a Web site for the times: www.myspiritualstimulus.com.
Even the welcome plaque in the civic plaza calls to visitors, “City of Elkhart. The city with a heart. File Your Unemployment Electronically.”
It’s still busy at the unemployment office, where there’s a steady stream. The maintenance worker. The parking lot paver. The secretary for the motor home manufacturer laid off after 20 years. They line up in the dark well before the office opens, drinking coffee and reading the local newspaper named simply The Truth.
Elkhart began as many small Midwestern cities did with the arrival of the railroad. More than 100 trains still pass through every day, punctuating conversations with whistles and freezing traffic at all but three crossings in town with an overpass.
The city of 52,000 has a small downtown of squat brick buildings from the turn of the century. Surrounding it is a ring of middle-class homes and, beyond that, flatlands that stretch for miles. Elkhart is home to the largest maker of high school band instruments in the U.S. For many years, it was where Alka-Seltzer was made.
But Elkhart’s largest industry started when Wilbur Schult saw a trailer display at the 1933 Chicago World’s Fair and, with an entrepreneurial gumption that residents say typifies the town, started selling trailers outside his father’s clothing store. Trailer manufacturers, dealers and suppliers popped up everywhere. Elkhart became the Detroit of the motor home industry, the “RV Capital of the World.”
About 75 percent of all recreational vehicles in the U.S. are made in Elkhart. About one in four jobs here are tied to the industry. This time of year, the streets are usually filled with RVs, families touring factories and browsing dealerships for the spring camping season.
Empty buildings fill the streets instead.
Monaco Coach. Closed. Hart City RV dealership. Closed. Flytraps bar and grill, Alley Oops diner. Both closed. A laundromat-slash-tanning salon. Closed. Elkhart Centre—Revitalizing Our Downtown. Closed.
Elkhart’s problems began some 16 months ago, when the unemployment was 6 percent. As gas prices climbed above $4 a gallon, fewer people wanted to buy a vehicle that could cost $600 to fill up. Then, as gas prices began sliding last year, a credit clampdown made it hard for buyers to finance RV purchases.
As “Daily Show” host Jon Stewart put it, “Imagine your main industry combines the slowdown of auto manufacturing with the plunging values of the housing sector. Figure out how to put a bank in the trunk, maybe the whole town disappears.”
Nappanee Street remains the withering lifeline of the RV industry. Once lined with dealerships, the road is left with four. Things like a graveyard next to an RV lot stand out these days.
At Great Lakes RV, sales in January and February were down 40 percent from last year, said owner Rob Reid. Even a customer who made $150,000 a year, putting down 20 percent, with a top credit score couldn’t get a loan for a towable trailer, he said.
What Elkhart needs most, Reid said, is the easing up of credit so customers can buy again and dealers can fill their showrooms with new models from the factories.
Unlike the auto industry, which has received about $25 billion in government loans, the RV industry hasn’t had a bailout.
Ed Neufeldt, 62, of nearby Wakarusa introduced Obama when he came to speak in February. The plainspoken father of seven lost his job in October when the Monaco Coach plant closed. He had worked there 32 years. Four of his children were also laid off from RV plants.
“They’re going to come through with the stimulus plan, but I don’t think that’s going to help the RV workers much,” he said. “What’s a man like me going to do when I worked in the mill room or saw room? How am I going to get a job in road construction or any of my buddies?”
At the Faith Mission soup kitchen, Neufeldt and other laid-off RV workers who volunteer there building housing for the poor sit at a lunch table and compare wounds.
Pete Swathwood spent 17 years in the woodshop for Monaco until September. Donnie Gaut did maintenance at Travel Supreme since the early 1970s until April. Buster Coleman also worked for Monaco.
“Them places aren’t going to hire people off the street,” Coleman said of road construction companies. “They’re going to hire all the people they laid off before. Well this guy worked for him this many years. He’s got a buddy that needs a job. So where’s that going to put us?”
“That Dick Moore, the mayor of Elkhart,” Neufeldt chimed in. “He made the statement that this would open up jobs for us, and the middle class would start to buy RVs again. I don’t think it’s going to open up for any of us.”
“Probably going to contract it out of state like everything else,” said Coleman.
“You’ve got a lot of union people sitting on the bench, too,” added Gaut. “These road jobs are usually union. And they’re not going to want a lot of non-union scabbers out there. That’s what we would be—scabs.”
Mayor Moore was elected in November 2007 just as the first signs of the downturn surfaced. A former streets commissioner, Moore can remember his father working for the Works Progress Administration during the Great Depression.
In his office at the municipal building, Moore said he has two answers for the RV workers.
“For one thing, don’t sell yourself short,” he said. “You come off an assembly line process where you worked. You pulled some wires. You did some plumbing. You did some carpenter work. You did some welding. You did all kinds of things. You have all kinds of skill levels coming out of there. It wouldn’t take any college training to put them on a construction job.”
Second, creating jobs in Elkhart and elsewhere will get the economy moving, he said. More jobs mean people will have more money to buy RVs.
Moore and other city officials visited Washington, D.C., and Indianapolis to push for stimulus money. They hired a lobbyist and drafted a $92 million list of projects they estimate could create 2,300 jobs.
City bids will specify that 30 percent of hiring must be local, Moore said.
“The true intent of the stimulus was to send the money to places in this country that are most economically distressed,” he said. “If that’s true, then aren’t we right up there on the top of the list?”
Elkhart and the surrounding area have been promised about $25 million so far.
Projects include $11 million to build a median along U.S. 33, a crumbling stretch of road leading to a shopping mall southeast of town; $4.2 million to repave the airport runway; $2.25 million to board up, demolish and renovate vacant homes.
According to Education Department estimates, Elkhart schools will receive about $2.8 million to help teach economically disadvantaged students. The county is due $3 million to remove lead in public housing. Heart City Health Center will receive $200,000 for low-income patients, and police will get $170,000 for lights and sirens.
Though intended for the auto industry, a sales tax credit for new vehicles and $2 billion for research into advanced batteries could also help the RV industry.
One of Elkhart’s first stimulus projects, expected to begin in May, is repaving the city’s main runway, now snaked with tar-filled cracks that branch like varicose veins. Airport manager Andy Jones bent down and picked up a golf ball-size piece of asphalt.
“That’s not something you want to get in a jet engine or hit a propeller,” he said.
The runway’s poor condition has caused him to turn away some planes, including those of the White House advance team for Obama’s visit. The runway project will employ 50 to 60 people and require 2,000 dump trucks of asphalt and milling material. In the future, Jones hopes that the runway improvements will attract a small cargo company.
At Elkhart Community Schools, business manager Douglas Hasler said the district doesn’t have the kind of visionary plans that Obama sketched out in his speech.
With enrollment declining, the district probably won’t use the stimulus to build new schools, hire teachers or acquire technology, Hasler said. He fears what happens when the money runs out in two years—and whether the district would be able to afford equipment maintenance and the salaries of additional staff.
“We need stable and regular funding resources each and every year and not just one or two years that happen to be difficult for the global and national economy,” he said.
Instead, expect high-efficiency boilers, automatic flush toilets and motion sensors that turn off lights when hallways are empty. Money for disadvantaged students and special education will probably be used for training.
Another problem is that the stimulus is running up against spring deadlines—for notifying teachers of layoffs and for putting out bids for summer construction projects.
“If we don’t know about this money pretty darn quickly, it’s really hard for us to plan for how we can expend it really quickly,” Hasler said.
At the old brick house on South Main Street, the Gonyons (rhymes with “onions”) recount their situation. Some of the boys take a bath while the girls brush their hair. The littlest ones watch Elmo movies and fall asleep on a gray couch next to a pile of Cheetos.
Among the nine children, ages 23 months to 18, there’s Haylee, Zachary, Kyle, Tylar, Aedily, Michael, Breana, Allison and Crystal.
The family had been living in a two-bedroom place when they bought the bigger house four years ago. It had some damage. But with eight bedrooms, it was their dream home.
Through a series of misfortunes—some they blame on the bank, some on the mortgage broker and some on themselves—the couple’s monthly payment shot from $700 to $1,200.
They managed for a while. Terry’s construction work is seasonal, and they saved through the summer. But when RV workers lost their jobs, they stopped hiring Terry to paint their walls and build additions to their homes.
“I tried to reason with [the bank],” Terry said. “You know work’s down. I’m not working. We really didn’t make enough to save up through winter. I tried setting up some kind of deal where they would drop the interest rate or drop the payments.”
With money tight, Desiree’s mother moved in from Colorado to watch the kids so Desiree could get a minimum-wage job at Subway.
Will the stimulus help any?
“I don’t think it will,” they said in unison.
Two days later, a man from the bank came and informed them they would be evicted by the end of the month. On March 31, a sheriff’s deputy arrived as they were moving out the last of their stuff.
The Gonyons rented a single-wide trailer on the outskirts of town.