A GOOD YEAR AHEAD? Experts predict at least economic stability for Wabash Valley
While the U.S. economy, on the heels of the Federal Reserve’s aggressive interest rate increases, has slowed, several business and labor leaders say they think 2023 will be a “good year” or “stable year” economically in the Wabash Valley. “We are stable here, certainly not experiencing layoffs. I think most everyone is still looking to hire employees,” said Bart Colwell, president of The Hometown Savings Bank. “Is it booming here? No. There are parts of the country where the economy is booming, like the Sunbelt,” Colwell said. “We are stable and that is generally the way the Wabash Valley operates.
“You could see a rolling recession in certain industries, or you might see a rolling recession in certain geographic areas, but not necessarily nationwide,” Colwell said.
Examples of cutbacks in the technology sector are evident nationally and internationally, including layoffs by Facebook parent Meta, Microsoft, Spotify and IB M, as well as SAP, which is Europe’s largest software company. Cuts are also occurring in other sectors. FedEx Corp. is cutting more than 10% of its managers worldwide amid concerns over rising wages, and Rivian Automotive, an electric truck maker, is laying off 6% of its workforce to retain more cash reserves, according to Reuters.
In the Wabash Valley, Railcrew Xpress, which provides transportation for railroad crews from train to train, last month announced it will layoff 70 workers at five Indiana sites, including 13 driver positions and one manager in Terre Haute, by Feb. 20. Other layoffs are in Evansville, Vincennes, Lafayette and Avon.
Terre Haute and Vigo County still face many challenges for 2023, said Robert Guell, professor of economics at Indiana State University.
In higher education, a notable employer in the Wabash Valley, “the ongoing challenges of ISU enrollment will continue to shrink ISU’s economic footprint in terms of jobs and students, as they are a significant part of the consumption base in (Terre Haute),” Guell said. “Though Saint Mary-of-the-Woods College and Rose-Hulman Institute of Technology are doing better on the enrollment front, (ISU’s) declines, I think, dwarf their increases.” This year will also give a good indication of the economic impact of the Terre Haute Convention Center.
In a 2022 forecast, now retired Kevin Christ, former associate professor of economics at Rose-Hulman, said he thought the convention center could be transformational and a driver of a revitalized downtown Terre Haute.
Guell, on the other hand, believes the convention center will become “a really, really expensive wedding venue.”
Guell said the city “is on the verge of testing whether I was right all along, or Kevin was right regarding the convention center and the nature and the volume of its business. This year, 2023, will be the first real fair test.”
While construction is underway for the Terre Haute Casino Resort, the Churchill Downs owned-and-operated property on the east side off Margaret Avenue, it is not slated to open until March 2024.
Guell said any lasting economic impact is on the horizon, although construction will have a short-term impact. Still, Guell said the placement of the casino on the fringe of the city limits, next to Interstate 70 interchange, will create a marginal economic impact overall.
Mayor Duke Bennett points out the state gaming license, enacted by the Indiana General Assembly, requires the casino pay part of its profits into the local economy. That payment is projected at $10 million, of which $5 million will go to the city, $3 million to a foundation aimed at helping non-profit groups and $2 million split among the city, Vigo County, Vigo County School Corp. and regional planning.
Vigo County and Terre Haute leaders point to incoming funds for improvement including more than $50 million funding from the American Rescue Plan Act; $20 million from Indiana’s Regional Economic Acceleration and Development Initiative (READI) grants; the state’s Community Crossings Matching Grant program aimed at improving roads which pumps in about $2 million for 2023.
A plan was outlined to the Terre Haute City Council last week to allocate more than $30 million in ARPA funds and the county this week outlined its plan for more than $20 million in ARPA funds. Each plan contains funding to remove housing construction obstacles to homebuilders plus address other issues such as helping small business, expanding tourism and funding childcare. That, Guell said, is important as childcare is needed to attract workers back into the workforce, a workforce that changed since the COVID-19 pandemic.
“The big employment picture in the United States is that large segments of the population — 2% to 3% of the people between the ages 18 and 70 — who could really be working, stopped working as a result of COVID. Some got back in (the work force) but a lot of people got out and stayed out” of the workforce, Guell said.
“The labor force participation rate nationally has dried up the available pool of people that Great Dane might hire or a restaurant might hire or anything else,” he said. “That number has stayed stubbornly below where we left off in December 2019. Every other (national economic) indicator seems to be fine, but we have left behind something like 4 million to 5 million people who should be working, who are not,” Guell said.
Some explanations include:
• People age 60, who were contemplating retiring early, and even older workers decided “to retire in bunches. The labor participation rate of people 55 and older dropped and didn’t come back,” Guell said.
• Women ages 25 to 35, who could be described, Guell said, “as people highly sensitive to the availability of child care, those people’s lives were made much more difficult with the intermittent nature of childcare with COVID, (and they) haven’t come back.” Those workers can be attracted back if more childcare resources are provided, he said.
• An aging population. “We don’t produce babies at the rate people die. So if you eliminate immigration, you completely bring it to zero, so the United States’ population is shrinking. The only way it is not shrinking is through immigration,” said Guell, who calls himself a Republican.
Guell said 2023 “will bring a lot of challenges nationally. I think we will have a relatively mild recession. I don’t think it will be cataclysmic, not on the employment front because there are fewer workers around, so that those who are laid off will be able to find something. “But I don’t see a robust recovery on the horizon,” he said. “I think we see inflation come down in the next few years, heading to the Fed target of 2%. I don’t see inflation below 4% soon; that is more a 2024 or 2025 thing.”
In the Wabash Valley, Lisa Lee, executive director of Western Indiana Workforce Development Board, Inc., sees 2023 as a stronger year for employment.
“I think there is still a challenge to find workers, which is nationwide, as there are still two jobs for every one person, but I think here we are in better shape,” Lee said. “I think the employers are finding more employees now than last year. I think that will improve throughout 2023.”
Lee said the state has numerous initiatives “that are available to employers just through what we can offer through the Workforce Development Board and the Department of Workforce Development.”
As an example, a governor’s Next Level Employment Training grant allows an employer to get up to $50,000 to train their current workforce, “so if their skills are not quite up to par, or need new equipment or even routine training that is done, the state will provide funds for that within the demand sectors of the state,” Lee said.
“The stipulation is the wage rate has to be at least $17 an hour for those who are trained and there has to be a 3% increase (in salary) at the end of the training period or the grant period,” Lee said, adding that program requires six month retention of workers.
“We have had lots of companies use that,” Lee said, “such as Liberty Trailers in Putnam County, Indiana Power Coating in Clay County and International Paper in Vermillion County. In Terre Haute, Sony (DADC) has used this program, B& G Foods, and even small companies, like Joe’s Mechanical, which is training heating and air conditioning folks to be full certified technicians.
Vigo economic sectors
Vigo County’s economy is a diverse makeup of public and higher education, healthcare, financial institutions and a strong manufacturing sector. As such, the county typically does not experience large swings in unemployment, unlike other areas that have one dominant employment sector.
The Terre Haute area’s top employers include some manufacturing, but also education, health care, distribution, banking, the Air National Guard, government and prisons.
Claudia Tanoos, vice president of the Terre Haute Economic Development Corp., said 2022 brought an expansion of Steel Dynamics and Saturn Petcare, among others. And the county could land two other large projects in 2023.
“Our most notable expansions we worked on this past year included Saturn Petcare, Hearthside Foods, Novelis, CHI Overhead Doors, Great Dane of Terre Haute and Steel Dynamics. The total investment for all of the projects total over $516 million; creating over 1,000 new jobs and retaining over 900 jobs,” Tanoos said.
For 2023, there are “two projects in particular that we feel pretty confident,” adding county officials are “cautiously optimistic that a decision will be made soon,” Tanoos said.
The county still has about 900 acres in the Vigo County Industrial Park I and Park II . Yet the projects being targeted could take much of that acreage.
“If we are fortunate enough to be awarded one of these projects, there will be a challenge with land availability in the Vigo County Industrial Park I & II . However, we are fortunate to have the Hoosier Jack Mega site,” a 4,650-acre, single-owner site near Pimento with water, gas, road and railroad available for development.
“This combination of undisturbed acreage and reclaimed surface mine acreage is owned by Hoosier Jack Land Company, LLC.,” Tanoos said. That company is headed by Terre Haute businessman Greg Gibson.
Also, “we are doing a lot of improvements in the industrial park,” Tanoos said. “We feel good about 2023” as the county continues to get inquiries.
Jim Fellows, business manager for the International Brotherhood of Electrical Workers (IBE W), said 2023 “looks very promising for work as far as labor is concerned. We have multiple solar projects that are slated to go, but that does not always mean they will go, but we have begun one solar project in West Union” in Clark County, Ill.
“We are looking to start another solar project in March and possibly one or two more in August,” Fellows said. “Solar work is in addition to our normal scope of work with maintenance and powerhouse work at the refinery in Robinson (Illinois).”
Fellows said Sullivan County has five proposed solar farm projects — Merom Solar, Fairbanks Solar, Turtle Creek Solar, Hoosier Jack Solar and Trade Post Solar.
“There is a lot of work coming and I think the federal infrastructure act has facilitated a lot of the work that is coming,” Fellows said. “Some of the work will include charging stations for electric cars, with some of that initial work starting in 2023.”
The IBE W Local 725, like other unions, will continue efforts to add workers.
“We will be beating the bushes looking for plenty of workers,” Fellows said, “to help facilitate the need of some of these jobs. It has not been a challenge so far, but I look for it to be more challenging, especially on some solar projects if they overlap or happen at the same time.”
Joe Bolk, business manager of the LIUNA ! Laborers’ Local 204, agrees. “I will have a hard time manning everything. It is hard to find people,” Bolk said. “I usually run 100 to 160 people on my out of work list at this early time of year and I’ve only got 32 now” on the list.
“I think we will all be in the same boat looking for people,” Bolk said. “If a person is looking for a decent job this year, there will be plenty in all facets I think.
“I have never seen (the upcoming work) as good as it is right now. I think 2023 will probably be a record year for us, not including the normal road work we do.”
Road work will increase as well, Bolk said, once projects funded through the $1.2 billion bipartisan federal infrastructure law takes hold.
In other areas, Emily Crapo, logistics manager at Morris Trucking Corp., said the trucking industry “has been on a rollercoaster for the past 2-1/2 years. I would hope 2023 can just become more stable.”
“The fourth quarter 2022 was really troubling. I think a lot of (retailers) had too much inventory and trucks transport about 75% of the nation’s goods,” Crapo said. “So people really cut off the shipping and rates plummeted in the fourth quarter. Even though sales were good, and we are seeing that in earning reports, however, (retailers) still have a lot of inventory to work through.
“January, February and March are typically slower in the (trucking) industry,” Crapo said. “Instead of going one quarter, we have two quarters in a row that will be slower. I would hope for a steady year this year. We have been so inconsistent with (shipping) rates, been up and down. I would like to see things stabilize.
“I think there is potential out there to do that. Fuel prices have come down, but are always a factor.”
Tim Drake, owner of The Mill Event Center and Amphitheater, said he thinks 2023 “will be a great year” as the musician touring industry is rebounding.
“The industry is starting to get keyed back up to where they were, kind of post COVID-19 (pandemic). They still have a couple hurdles, such as workers. When COVID hit, everyone who had done service or other jobs went somewhere else and have not come back” to those jobs, Drake said.
“Tours are the same and are a thing the industry is trying to work out,” Drake said. “For us, in our location, we are doing really well. We are still very new compared to a lot of other (outdoor music) venues. We have some tremendous shows lined up from this year. I think we will be around 12 shows.”
“People are starting to come out” for live, outdoor shows, Drake said. “I hate to always go back to COVID, but we are still conditioning people to come out. … “This will probably be our biggest year. It is our third year. Technically we had to stop for COVID, but this is our third year,” Drake said.
Brent Compton, who owns Pacesetter Sports with his wife, Jennifer, said he thinks 2023 “is looking to be very stable.”
“I don’t know that we are recession proof with sporting goods, but we are really close with what we have come through in the past couple of years,” Compton said.
“Youth sports and schools closed down briefly, but for most part were even open during (the COVID-19 pandemic, as teams sports were limited to families for attendance). We do a lot of retail with the general consumer, but a vast majority of our business is with youth sports, which tends to be pretty steady,” Compton said. While January and February are the slowest months, sunny days can generate consumer traffic.
Now, the business is doing pre-orders for spring sports, which are about a month away from starting up.