The towns of Elkhart and Warsaw sit less than 40 miles apart in northern Indiana. But, when it comes to the local manufacturing climate, the two communities might as well be located at the North and South poles. The two extremes help illustrate an interesting phenomenon: Today’s crazy economic climate doesn’t always follow standard geographic boundaries.
The towns of Elkhart and Warsaw sit less than 40 miles apart in northern Indiana. But, when it comes to the local manufacturing climate, the two communities might as well be located at the North and South poles.
Elkhart proudly boasts that it’s “the recreational vehicle manufacturing capital of the world.” The surrounding area is home to more than 100 RV companies, such as Dutchman, Fourwinds, Gulfstream, Jayco and Monaco Coach, that build a wide variety of trailers, campers and motor homes. There’s even an RV museum and hall of fame in Elkhart. In fact, one out of every four jobs in the area is related to RV manufacturing.
However, the industry has fallen on hard times lately. It’s reeling from the effects of record-high gas prices coupled with a tight credit market.
Thousands of jobs have been slashed recently as the industry posted its lowest number of shipments since the 2001 recession. October demand was down more than 50 percent, according to the Recreational Vehicle Industry Association (Reston, VA) As a result, many RV factories in and around Elkhart have laid off assemblers and reduced production capacity.
Some companies, such as Ameri-Camp (Syracuse, IN), a manufacturer of camping trailers, have gone out of business. Starcraft RV Inc. (Topeka, IN) is closing its camper factory in Topeka and consolidating production in Middlebury, IN. Other companies, such as Kinro Inc. (Arlington, TX), a manufacturer of RV doors and windows, have mothballed local factories until the economy improves.
The Elkhart area currently has one of the highest unemployment rates in the United States. During the last 18 months, the local jobless rate has skyrocketed.
A short drive south of Elkhart lies Warsaw, the self-proclaimed “orthopedic capital of the world.” It is home to some of the largest companies in the industry, such as Biomet, DePuy, Symmetry Medical and Zimmer. Business is booming at those companies, which assemble artificial implants such as hips, knees and spines.
According to a recent study conducted by the Freedonia Group Inc. (Cleveland), U.S. demand for orthopedic implements will increase 9 percent annually between now and 2012. “The market for reconstructive joint replacements will gain upward momentum from an aging population and the widespread prevalence of physically active lifestyles,” says Bill Martineau, senior analyst. “These trends will expand the number of persons suffering from degenerative and injured joints.”
Orthopedic device manufacturers in Warsaw are struggling to keep up with demand for their products. Biomet recently announced that its first quarter 2009 sales increased 13 percent over the previous year. It was the company’s fifth consecutive quarter of double-digit growth. Cross-town rival Zimmer recently revealed that it plans to invest more than $19 million in its local foundry. Last year, the company unveiled a $66 million project to add 120,0000 square feet to its manufacturing plant. OrthoPediatrics Corp., a small niche player, is another local company that’s in the process of expanding its manufacturing footprint in Warsaw.
The two extremes of Elkhart and Warsaw help illustrate an interesting phenomenon: Today’s crazy economic climate doesn’t always follow standard geographic boundaries. These days, it can be both sunny and rainy on the same afternoon in the same neighborhood.