Toyota's sweeping auto recall hit home in Elkhart this week as a local manufacturing heavyweight was identified as the maker of the problematic gas pedal used in some 2.4 million vehicles.
Elkhart-based CTS Corp. made its best effort at damage control in the wake of the revelation, noting that the faulty parts have not been linked to any accidents or injuries.
As The Elkhart Truth reported, CTS CEO Vinod Khilnani told analysts on an earnings call Thursday that CTS has been working with Toyota to redesign the pedal part to meet tougher standards and that "three or four" CTS plants are already producing the newer pedals.
Khilnani also tried to downplay news that Ford Motor Co. has stopped producing a commercial van that it makes in a venture with Jiangling Motors Corp. in China because the vehicle uses a pedal of a different design produced by CTS.
CTS was suffering from the harsh economy before the recall, along with most of the auto industry. Revenues for 2009 were down 28 percent compared to 2008, to $499 million, the company reported on Wednesday.
(Click here for the full report.)
Khilnani focused his comments on the "momentum" of the third and fourth quarter, achieved in part because of salary and benefit reductions in 2009. As the recession eases, CTS management projected full-year 2010 sales to increase 10 percent to 15 percent over 2009.
As for the recall, Khilnani said that he did not believe that "when the dust settles" it would hurt the company's results in 2010.
CTS has 19 manufacturing facilities in the United States, Canada, China, Mexico and the Czech Republic, producing automotive parts as well as components used in telecommunication systems, medical devices and military equipment.

John Brecher / msnbc.com

  Thomas Clark cuts the top from one of hundreds of aluminum cans while constructing a solar air heater in his brother's garage in Goshen, Indiana. Standing behind his nephew Alex, 13, is a prototype of the unit, which works by circulating indoor air through black-painted pop cans heated by the sun. Similar models and do-it-yourself plans are widely available online.

When gas prices spiked in 2008, Thomas Clark, a cabinet maker from Goshen, saw an opportunity.

He started a side business making make solar air heaters from scrap and recycled material. His design and materials are basic and cheap: he gets aluminum cans at 55 cents a pound, and 2 x 4 foot plywood sheets scrapped by the RV industry for $2 each. After starting out at a woodworkers' guild, Clark moved the growing operation to his brother's garage.

Clark's project represents tinkering, innovation and entrepreneurship that this area has long boasted of--the traits that helped turn it into a manufacturing center.

As the RV industry tanked with the economy, and Clark's hours were cut by a third in 2009, he had extra time on his hands--and added motivation to supplement his income. Through eBay, Clark has sold about 25 of the 2000 BTU units for $150 each.

"People say 'oh, 2,000 BTU, that's not a whole lot'," said Clark, "but it runs continuously."

It's a modest supplement in terms of heat, and in terms of income, but steady, so long as the sun is shining.

Of all the tea-leave readings, economic projections, and number crunching, this could be the gloomiest assessment for Elkhart area so far: A new report released by U.S. Conference of Mayors predicts that for Elkhart-Goshen to return to peak, pre-recession employment levels could take 30 years.
The report, "U.S. Metro Economies: Rate of Recovery," released at the annual meeting of American mayors in Washington, D.C., says labor markets will pick up steam in 2011-2013. But half of all metro areas—185—will not achieve pre-recession peak employment levels until 2013 and beyond, according to the report, prepared by IHS Global Insight.
Of the 350 cities included in the survey, 15, including Elkhart-Goshen, will not get back to the low jobless rates of their boom times until 2039, reports Josh Weinhold, who is covering the 3-day event for The Elkhart Truth.
Despite positive signs in the economy emerging at the end of 2009, the mayors' statement said most cities are "far away from recovery—especially in their labor markets."

The mayors are calling for the federal government to provide more direct support for cities, including fiscal help for local governments in especially hard-hit areas, more block grants for communities to undertake conservation projects, neighborhood revitalization and community policing. They call for renewal of federal stimulus money for youth summer jobs. And they want federal dollars for transportation to target urban areas more than they currently do, helping cities address congestion and joblessness.
"This data is solid proof that we need the Senate to pass a MainStreet jobs package now,” said Elizabeth Kautz, president of the organization and mayor of Burnsville, Minn. “We are in the middle of a jobs emergency that demands decisive and swift action.”
The mayors’ urgent appeal for jobs was underscored by a major economic report also released Wednesday forecasting job recovery and unemployment rates in the nation's 363 metropolitan areas, where 85% of the people in this country live. The report indicated that over 105 metros will still have unemployment rates above 10 percent; and 214 metros will have unemployment rates higher than 8 percent by the end of 2011, the mayors said in a statement.
On Thursday, the mayors’ took their case to the White House in a meeting with President Obama and his Economic Advisory Team.
The full "Metro Economies" report can be viewed in pdf format on the U.S. Conference of Mayors Web site.

The man who arguably sparked all the excitement about producing green vehicles in Elkhart has lost his position at the head of his company, Electric Motors Corp, The Elkhart Truth reported. Wil Cashen -- who enthused to msnbc.com last July about the "unimaginable potential" for new green tech production in Elkhart's empty factories -- was removed from his position as CEO of the Malibu-based company, EMC announced on Thursday.

What Cashen's departure means for EMC's Elkhart initiative has not been spelled out, but it certainly could be positive if results in the company nailing down its plan and sticking to it.

The company had suffered "a problem of focus" said chief financial officer Ralph King. Cashen, who came to Elkhart in early 2009 trumpeting the idea of building hybrid pick-up trucks and electric drive trains--projecting that the operation would generate 1,600 jobs--but the vision kept shifting while producing few concrete results.

So, while Cashen led the charge to build green-technology vehicles here, EMC lags behind two other companies that have entered the green vehicle arena here.

Unlike Navistar, and the Norwegian company Think, which just announced its plans to produce in Elkhart, EMC has not received any public money to get its operation started. The company was turned down in the opening round of applications to the U.S. Department of Energy. Then it was seeking $500 million.

This time, it will set a more realistic goal--maybe $20 million, says King.

King insisted that the company was still viable, and committed remaining in Elkhart to develop its products, while running the operation with a "stringent, old-fashioned management style."

This change may not have the romance of Cashen's grandiose vision, but old-fashioned management might be what it takes to produce old-fashioned results.

Elkhart is hardly alone in its suffering in this recession, as many Elkhart Project readers have pointed out.

"Elkhart, Schmelkhart!" grumbled a reader called ‘withoutadoubt’ after my last post on the Norwegian carmaker Think deciding to locate a new facility in the northern Indiana town. “What is this place, the center of the universe?”

Answer: No. But the Think deal presents a good opportunity to restate the purpose of The Elkhart Project, which is to report on the recession and the recovery through the lens of a single community and individuals as a way of showing what is happening throughout the United States.

The Think investment in Elkhart illustrates, among other things, the tough decisions that communities have to make as they try to create jobs for local workers. That includes deciding just how much they are willing to offer in the way of tax incentives to make their location more attractive than others.

Local governments across the nation are struggling with the notion of tax abatement to lure companies — a strategy that has risks — as reported in the The Elkhart Project in November.

The financial incentives the local governments offered Think were not the only factor the Norwegian company considered in its choice of Elkhart as a site, but they were an essential part of it, reported Josh Weinhold of The Elkhart Truth.

The Elkhart City Council gave initial approval to a 10-year tax phase-in for Think at a Monday meeting, which also allowed significant state tax benefits to kick in. The Truth report says that "Think is expected to save about $2.92 million in taxes over the life of the phase-in, but pay almost $2 million in actual taxes. The jobs it brings in are estimated to generate $705,000 in new city income taxes." The investment could also receive a federal loan through the U.S. Energy Department, which has allocated $25 billion to spark development of electric cars and trucks.

Not only was Elkhart weighing the financial costs and benefits of the deal, but the less tangible impacts – whether the presence of another "green" company could help change it from the "RV capital" to a center for development of next-generation vehicles and new technology.

In this case, even local officials who profess to be against tax abatements in principle seemed to support substantial perks for Think.

"When you have a good project, there's not much that can stand in the way," Elkhart City Council member Rod Roberson, told The Truth. "In no way was the council going to be an obstruction to it. I think that we all wanted this to be successful."

For more detail on the deal, the vehicle, and the company behind it, see the series of articles in The Elkhart Truth: Elkhart becomes an electric car center Think City car: No gas required In eleventh-hour negotiation, Elkhart City becomes Think's U.S. home Think had been eyeing Elkhart County for a year

Uff-dah! It's been a long road, but after many months of consideration, a Norwegian automaker apparently has chosen Elkhart as the site for its new electric car production site--a $43.5 million dollar investment that the company says will create 415 much-needed jobs in the recession-battered area.

According to a report by The Elkhart Truth, the Elkhart City Council was to meet Monday evening to vote on a proposed tax abatement package to assist Think, which had also considered production sites in Michigan and Oregon for the production facility.

A press conference is slated for Tuesday, including the economic development body for the county and Indiana Governor Mitch Daniels, is expected to make the official announcement. Coming nearly a year after President Barack Obama visited this northern Indiana county to unveil his economic stimulus plans--choosing the area to illustrate the depth of the economic crisis--Elkhart will have a moment in the spotlight for a positive development.

Think is to become the third electric vehicle manufacturer in the area. Navistar International Corp. plans to build all-electric delivery trucks starting next year with help from a $39 million federal grant. And Startup Electric Motors Corp. intends to make electric-hybrid drive trains to be installed in various vehicles, starting with a joint venture with Gulf Stream that would make light-duty electric trucks.

Elkhart has the manufacturing base, transport links and workers to do the job--thanks to the once-thriving recreational vehicle industry. Now the town needs only learn the toast to ring in some good fortune. As the Norwegians say: Skal!

As Elkhart moves into the New Year, it sips a bittersweet cocktail of hope, painful transition, and economic setbacks.

On one hand, national economic indicators that allow for cautious optimism are playing out in some tangible change on the ground in Elkhart--much needed signs for a resilient but battered community.

Wholesale shipments of motorhomes had finally outpaced 2008, The Elkhart Truth reported on the final day of 2009, citing national numbers from the Recreation Vehicle Industry Association. According to Mac Bryan, vice president of the RVIA the numbers reflect two positive trends: easing of financing, and growing confidence among RV dealers. With each month he says, there is "less likelihood of a double dip"--or potential second slump in demand.

Meantime, The Truth also reported that a local company producing doors for a variety of motor vehicles had purchased one of the many RV facilities that has been standing empty since August 2008. The shut down of the old Monaco Coach plant in Nappanees resulted in lay-offs for hundreds of workers, and the company that made the purchase, Challenger Door isn't likely to replace those jobs any time soon.

But the purchase of the 143,000 square foot facility signalled potential, and marked a step away from the trauma of the factory closure. Nappanee Mayor Larry Thompson told The Truth it was "very encouraging" to see a local company like Challenger invest in the community.

Of course, every few steps forward are punctuated by a step backward--including the Christmas Eve announcent by Mishawaka Humvee producer AM General Corp that it would lay off 250 workers because it hadn't received enough new orders to maintain the current workforce.

With unemployment still running around 15 percent in the area, the Elkhart Salvation Army reports that demand for food, utility assistance, and other services remains extremely high--some 20-30 percent higher than in 2008. And raising the funds to meet those needs remains a challenge, according to Major Steve Woodard of the Elkhart Salvation Army. The organization has raised about $300,000 of its $400,000 goal for the holiday fundraising season, which ends Jan. 31. Woodard said the general public has pitched in to make the bell-ringer campaign a success, and more than meet a goal for in-kind giving of household goods and food, while the mail-in campaign has lagged.

An anonymous Elkhart donor put up two major gifts during the holiday season--$100,000 to Church Community Services, and $200,000 to the United Way of Elkhart--in a challenge to other wealthy residents to give more. Perhaps the move will help philanthropy turn a corner here too, though that remains to be seen in 2010.

"It is bittersweet--a lot of people are still hurting out there," says Woodard, looking to 2010. "A lot of people are optimistic (about economic recovery) but it will take awhile."

A campaign urging Elkhart residents to buy locally in the holiday season appears to have paid off for merchants in Goshen, The Elkhart Truth reported on Sunday. A group of Goshen city business owners said many locals did go out of their way to "shop outside the box" — eschewing mega stores like Wal-Mart and the Target — a shift that helped boost the small businesses' sales over last year's dismal numbers. One shop owner said 2009 had been the best Christmas season she has had in her six years of operation. The downtown businesses also benefited from strategic adjustments since last year, such as switching to lower-priced products, and opening on Sundays, when they typically are closed.

A Scandinavian manufacturer of electric cars is considering building a plant in Elkhart County.

Norway-based Think is looking to build its first U.S. plant and has narrowed the search to three locations, including Elkhart County and sites in Oregon and Michigan, company officials said Tuesday, according to a report in the Elkhart Truth.

If the company decides to build its plant at the site near Middlebury, it would employ more than 400 people.

Think would be the third electric vehicle manufacturer in the area. Navistar International Corp. plans to build all-electric delivery trucks starting next year with help from a $39 million federal grant. And Startup Electric Motors Corp. intends to make electric-hybrid drive trains to be installed in various vehicles, starting with a joint venture with Gulf Stream that would make light-duty electric trucks.

Both operations are based in Wakarusa.

Jen Shepherd / Elkhart Truth

Ted Williams of Elkhart, left, thanks volunteers at Bert's Appliances after volunteers handed him one of the 1,000 turkey dinners that the store gave away to people who are suffering economically.

The economy is undoubtedly showing signs of life, but there's no denying that many residents of Elkhart County remain in need.

The Elkhart Truth reported Thursday on an effort by the owners of Bert's Appliances in Osceola to help their less fortunate neighbors by passing out 1,000 free turkey dinners.

Click here to read The Truth's article on the giveaway.

Jen Shepherd / Elkhart Truth

Carolyn Hunter of Mishawaka, right, pushes her food items to her car after waiting in line at Bert's Appliances for the food give-a-way Thursday.