As scars from the recession fade in northern Indiana, recreational vehicle industry businesses in Elkhart county feel a drive to make investments toward serving multiple markets.
More companies want to further diversify their customer base to provide extra insulation against possible future downturns.
“They’re having a tough time diversifying themselves outside of the RV industry,” said Elkhart County Commissioner Mike Yoder.
As an example of diversification, the new Talon Products plans to build a $13.5-million, 120,000-square-foot plant in Bristol by next year. Up to 120 new jobs could be created by 2018.
The company will make exterior components primarily for RV manufacturers, then eventually branch out to serve transportation and residential industries, according to David Smith, company president.
“We have long-term plans of diversifying into different markets,” Smith said.
His family launched Talon as a new venture, separate from their other company, Alpha Systems. The Elkhart-based business manufactures rubber roofing, molded plastic products, sealants and adhesives to supply RV, marine and residential manufacturers.
The Smith family started Talon in order to meet demand for the products it will make. Smith wouldn’t specify what they are, citing competitive reasons.
The family felt the current economic climate and the outlook for the RV industry over the next decade looked strong enough to invest in a startup.
“We have a good feeling about the next 10 years,” he said.
Alpha Systems, which started in 1984, weathered the recession’s costly toll on the RV industry and Elkhart County’s economy.
Banks clamped down on issuing new credit, and sales of RVs came to a screeching halt amid plummeting demand. Gas prices and materials costs also soared going into 2009, Smith pointed out.
As a result, manufacturers cut jobs en masse, and Elkhart County, where about 60 percent of the nation’s RVs are produced, saw its unemployment rate skyrocket.
Joblessness blasted from a low of 3.9 percent in May 2007 to 20 percent by March 2009. The number of unemployed grew from 4,000 to more than 18,000, data from the federal Bureau of Labor Statistics shows. The labor force fell from a total of nearly 102,000 workers to about 91,000 in that period.
When the recession played out and the economy began improving, so too did the county’s economy.
Over the past six years, jobs returned in droves to meet renewed demand for RVs. The unemployment rate returned to 3.9 percent in June, with the total labor force at 106,000.
Wholesale shipments of RV motor homes grew from a cumulative amount of about 13,200 in 2009 to nearly 44,000 in 2014, according to Recreational Vehicle Industry Association data. Shipments by the end of July were 5 percent higher than they were by the end of July 2014.
Meanwhile, manufacturers also entered a period of consolidation, prompting parts makers to spread out and market products to other industries as well, Yoder said.
“Suppliers to RV industries have to find other ways to supply their products in order to diversify their business,” Yoder said.
Elkhart County Commissioner Frank Lucchese views that as a strength, saying companies learned how to become more efficient, adaptable and innovative out of the recession.
“It just shows the diversity we have in Elkhart County with the ability for businesses to step into a different market,” Lucchese said.
But diversifying the county’s economy will take more work.
The RV industry accounted for about 3 percent of the county’s gross domestic product in 2012, U.S. Bureau of Economic Analysis data indicates.
The industry also employed nearly 60 percent of the workforce among the county’s 20 largest employers in 2013, with Forest River Inc., Thor Industries Inc. and Drew Industries Inc. as the top three, according to the Elkhart County Economic Development Corp. Beacon Health System, with nearly 2,000 employees, was the next largest private employer.
“It’ll take some time to diversify,” said Chris Stager, the EDC’s interim president. He expressed confidence in the strength of companies in the county. “Elkhart County can build anything. Literally, that’s the truth, because they do.”
He pointed to audio tech company Harman International’s engineering plant and lighting manufacturer Vista Manufacturing Inc. as examples of the county’s growing business diversity and of the county’s focus on attracting more companies both independent of and connected to the RV industry.