Ed Wallace

RV Capital of the World

Just after the Second World War ended, Elkhart, Ind., was already known as the travel trailer capital of America. Its ties to Americans’ recreational habits go back to the Great Depression; and, as the Sixties unfolded, Elkhart was one of the leaders moving into full-sized motor homes and conversion trucks and vans. True, Winnebago, probably the best-known motorhome, had its headquarters in Forest City, Iowa. But Elkhart was still the nation’s capital for recreational vehicles, a carry-over from the days when 100 manufacturers in that region built nothing but travel trailers for the rest of us.

But, because Elkhart’s citizenry’s success is tied directly to both petroleum prices and the country’s economy, it’s still a town without pity: Even the smallest shrinkage in the nation’s GDP tends to put a damper on large and extremely expensive purchases — such as a recreational vehicle. Case in point: In 2000, the year after gasoline sank to 99 cents per gallon, Elkhart’s unemployment rate was a mere 4.5 percent. But things were already changing that year, as then-President Bill Clinton threatened to tap our Strategic Petroleum Reserves to weaken oil prices because gasoline’s pump price was heading to a shocking $1.40 per gallon.

That alone drove Elkhart’s jobless rate from 2000’s 4.5 percent to 7.8 percent by the end of 2001. It would take five years for that rate to recover to a more tolerable 6 percent in 2007, by which time the price of gasoline was about to explode — from August’s $69 per barrel of oil to July of 2008’s $147 a barrel. By that time the city’s unemployment rate had jumped to 10 percent; and within a year, once the world’s financial system melted down, Elkhart had 22 percent unemployment, the worst of any city over 50,000 in America. For the citizens of this Northern Indiana town, things could not have been worse.

Not that they were that much better off even in the best of times. After all, this is a city that earned only $34,865 per household in 2000; and today that number sits slightly lower at $34,212. The per-capita income is just $16,144, substantially down from 2000’s $17,890; and if one averages that out then Elkhart is a town full of $11.15-an-hour jobs.* Gosh, living in this winter wonderland, where you don’t have to mow your yard until the last snows clear out in May, and making not much more than minimum wage building what might be a million-dollar motorhome sounds so appealing. It’s amazing that, if you Google “RV jobs, Indiana” you get a sizable number of open positions today. But they need to haul in people to keep motorhome production going; because today in Elkhart, unemployment is down to just 3.9 percent.

You’ve probably never thought of it this way, but I can’t remember any RV manufacturer shutting down its operations in America and moving those jobs to Mexico. Now, during the Financial Meltdown, well-known RV companies like Fleetwood declared bankruptcy and shuttered their California operations. They were picked up by a private equity group that moved the A Class motorhomes to Decatur, Ind.; and the remaining units went to another company in that area. But Al Hesselbart, the former historian at the RV Hall of Fame, says Fleetwood’s tale of woe shows how the high cost of doing business in California is to blame for their demise in 2009. It’s almost as if he didn’t know that gasoline at over $4 a gallon everywhere — and the entire financial system’s melting down — was primarily what ended Fleetwood’s run.

And for the record, Fleetwood’s factory was not located on pricey Rodeo Drive in Beverly Hills, but in the former farmland of Riverside, Calif., where the company was established in 1950. And because of Proposition 13’s passing in 1979, limiting property tax increases, it’s fair to say Fleetwood had major equity in its holdings there. Moreover, having been in the RV business myself, 41 miles west of Fleetwood’s Riverside factory, I can assure you that our labor force was the most temporary kind; labor payroll was not a major burden on our firm.

Our former RV historian, however, may not have put his finger on exactly why Elkhart has made the comeback it has over the past eight years. Writing last June 1, he said, “RV companies also need a strong business climate with low taxes and limited regulations. Under the leadership of Governor Pence, that’s exactly what the RV industry is finding in Indiana today.” Wow. I’m certainly not knocking Governor Pence, who is in fact admired as a person even by members of the opposition party, but Elkhart has been a powerhouse for this type of manufacturing all the way back to the Great Depression. Moreover, Pence wasn’t even inaugurated as Indiana’s governor until 2013. That’s well after the RV manufacturing industry’s recovery, which technically began in late 2008 when President George Bush committed to saving the American auto industry. The resulting legislation was passed under the current president to make it so.

Forget saving the banks so that people could borrow the money to buy these very expensive vehicles. Without Detroit, or the American auto parts suppliers, both also handed billions of dollars to save that industry, there would be no cutaway vans to make Class C motorhomes, or chassis rails with engines and transmissions on which to build Class A motorhomes, either. And without the basic motorized building blocks for most RV manufacturing, that industry could never have come back as it did.

Further, Mike Pence, then a Congressman representing the 6th Congressional District in Indiana, most assuredly voted against bailing out the auto industry, thereby voting against the recovery of Elkhart’s RV business. A year later Pence even doubled down on his supposed wisdom of refusing to help Detroit, saying it all could have been best served by GM’s going through a normal bankruptcy. It’s truly frightening that he would say that, because the facts tell us that all of Wall Street failed in that period. There was no ability whatsoever of getting “debtor in possession” financing to keep GM open through a normal corporate bankruptcy process. Notice no one is saying that Chrysler could have taken a normal bankruptcy; they didn’t care whether Chrysler failed.

So, no, the return of the nation’s RV business came first, with saving the manufacturer of their chassis and the auto parts supplier business; then gasoline prices fell from $4+ in mid-2008. Interest rates were kept low and pressure from the government to lend more money was steady; and, with confidence restored because the worst possible scenario — meaning a new Second Great Depression — did not happen in 2009, our economy recovered. So did RV sales.

Today Elkhart, Ind., has a jobless rate of 3.9 percent — the best in its modern history and way down from the nation’s worst in class, 22 percent in March of 2009. It’s #1 in the percentage of adults employed. Recently The Atlantic magazine sent Alana Semuels to that city to see how citizens felt about their town’s recovering thanks to the government’s actions over the past eight years. Apparently, she got an earful. Chris Corbin was quoted as saying, “He [Obama] didn’t help us here, but he took credit for what happened. It’s going to take two terms, but he’ll [Trump] fix things.”

Josh Banks saw things fall so much during the hard times that his company, which makes glass for RVs, had to cut back his hours to just 30 a week, which made it extremely tough for him to care for his wife and kids. Now with the best recovery in Elkhart’s history happening, he’s working 45 to 50 hours a week. But Banks gives full credit for the resurgence to local business leaders and zero credit to the administration or the government.

And Brandon Stanley, who owns a bar in town, said the economy is already improving since the election. If his bar business is better, that could be taken one of two ways. Either people are happy and celebrating, or they’re so depressed they’re trying to drown their sorrows; either way, they again have enough money to go out and drink among friends. Stanley didn’t elaborate on the cause; but, when asked about the incredible fall-off in the jobless rate, he dismissed that as the government playing around with the unemployment numbers.

In 2009 I read many stories on how the economic downturn had nearly destroyed Elkhart, which to be fair depends on a bubble economy to begin with. But that Brandon Stanley has completely wiped the memories of that event and its devastating effect on his hometown — and that he thinks that it’s simply the government altering how it figures jobless stats that accounts for the positive news — just boggles the mind.

But the RV historian may be even more mystifying. He credits the turnaround to a former Congressman, who voted to let the motoring industry collapse completely and who only became governor after the town’s massive financial revival was already long underway. He’s spouting ideology, not history.

Still, there’s something seriously wrong in this town. It went from the worst unemployment in America to, just 8 years later, a lower unemployment rate than the Great State of Texas — and yet the city’s per-capita annual income is still $1,700 less than it was 17 years ago.

This fact does explain why RV manufacturers aren’t shutting down and moving to Mexico. You see, that $16,144 per capita income (per City-Data), or $11.15 per hour averaged out and based on a 40-hour workweek, is not far off from what autoworkers make south of the border.

The industry is back and bigger than ever, but the incomes in town are down from 17 years ago. So the convenient political dogma, “A rising tide lifts all boats,” clearly isn’t true anymore. That’s the saddest part of the story.

*Per capita income is based on total income divided by the entire population of the region. The estimated $11.15 wage used in this column is based on removing the estimated size of the population under 19 and over 65. Ed

© 2017 Ed Wallace

Ed Wallace, is a recipient of the Gerald R. Loeb Award for business journalism, conferred by the Anderson School of Business at UCLA. He reviews new cars every Friday morning at 7:20 on Fox Four’s Good Day and hosts the top-rated talk show, Wheels, 8:00 to 1:00 Saturdays on 570 KLIF AM. E-mail: wheels570@sbcglobal.net