EVANSVILLE — Was 2012 a good year or a bad year for the Tri-State’s economy? The short answer: Both.
The past 12 months were marked by uncertainty, a mixed bag of economic indicators and company news ranging from big workforce expansions to closures.
As a sampling:
In February, Toyota’s Princeton, Ind., plant announced plans to start producing hybrid and export versions of its Highlander sport utility vehicle. The move will increase the plant’s annual production of that model from 130,000 to 180,000 year and will add about 400 new jobs. Toyota started hiring workers for this purpose in July, with the new Highlanders expected to hit the market in late 2013.
But February was also when Evansville-based financial services company Springleaf announced it would close branch offices and reduce its workforce. That reduction was followed by others, and by the end of the year Springleaf had eliminated more than 800 positions, including some in Evansville.
Other job reductions came from two St. Louis-based coal companies with Tri-State operations.
Patriot Coal Corp. announced in April that it planned to close its Freedom underground mine in Henderson County, affecting up to 200 people. In July, the company filed for Chapter 11 bankruptcy.
Peabody Energy announced in September it would shut down its Air Quality Mine in Vincennes, Ind., affecting about 230 workers. In November, Peabody announced it would close its Willow Lake Mine in Saline County, Ill., affecting about 400 workers.
Whirlpool, which shut down its Evansville refrigerator production plant in 2010, announced in August that it will also shut down its Evansville refrigeration product design center, moving that work to Michigan. At the time Whirlpool made the announcement, it had 217 employees, most of them engineers. The closure of the Evansville center is expected to be complete by the end of 2014.
Then, in September, Professional Transportation Inc. announced its plans to add up to 100 new jobs at its Evansville headquarters. The company, also known as PTI, provides transportation and logistics services to railroad companies, including transporting railroad crews to and from work assignments.
Evansville-based Berry Plastics went public in October, and later that month the company announced it would reopen its Madisonville, Ky. plant in 2013. Employment at that plant is expected to reach 400 or more within a few years.
In a regional economic report that he recently prepared for the Indiana Business Review, University of Southern Indiana business school dean Mohammed Khayum wrote that “the current recovery is taking longer to attain pre-recession levels of employment and output, and is characterized by mixed signals on its intensity and momentum.”
The Evansville metro area’s unemployment rate as of September was 6.7 percent, down from 8.3 percent in January 2011, Khayum noted. But the area’s gross metro product declined an estimated 1.6 percent as well.
Just as 2012 was a mixed year, observers are split on what they see ahead in 2013.
Christy Gillenwater, the incoming president and chief executive officer of the Chamber of Commerce of Southwest Indiana, said she believes the year ahead will also contain some economic uncertainties, especially as they relate to the so-called fiscal cliff and the nation’s debt levels.
“From what I’m hearing, 2013 is going to be somewhat of a cautionary year.”
Gillenwater said companies may remain hesitant to make major capital investments — but 2013 may be the year they make firm plans about the spending they will do in the next few years.
“Businesses are sitting on a lot of cash,” she said.
One thing that should be a positive in 2013, Gillenwater said, is the recent completion of I-69 from Evansville to Crane. That new stretch of interstate should provide a boost to the area, she believes. In particular, it could open up business opportunities linked to the Crane Naval Surface Warfare Center.
Greg Wathen, president and chief executive officer of the Economic Development Coalition of Southwest Indiana, said he’s optimistic about 2013.
“I think it’s going to be a better year than this year, and I think it’s going to be pretty consistent,” Wathen said.
In part, Wathen said his optimism is because his office has about 22 projects in the pipeline — companies that are at considering relocating or expanding in the area.
He’s hopeful that some of these prospects will turn into solid deals in the first quarter of 2013, which would set a good tone for the rest of the year.
“I think, psychologically, that could give our region a lot of momentum.”
One thing that has caused companies to act cautiously recently is the so-called fiscal cliff. At the time this story was written, U.S. legislators still had not agreed on a plan to deal with the looming tax increases and spending cuts.
The fiscal cliff will be the first issue facing the business community in 2013, Wathen said, but he doesn’t believe it will have a long-term impact on the market.
One industry to watch is manufacturing, in part because it plays such an important role in the local and national economy.
In his economic report, Khayum noted that manufacturing made up 15.3 percent of the Evansville metro area’s total employment as of September. In comparison, it made up 16.7 percent of Indiana’s total employment, and 9 percent of total U.S. employment.
However, Khayum also pointed out that this percentage has dropped over time — in the early 1990s, for instance, manufacturing represented more than 20 percent of total local employment.
That being true, Wathen said he is seeing a resurgence in U.S. manufacturing.
Some of that is so-called “reshoring” — companies who had moved production overseas now moving it back to the U.S. But other growth is coming from foreign-owned companies, Wathen said.
Wathen said most of the projects his office is currently working on involve manufacturers. And several of those companies are foreign-owned operations looking to start or expand U.S. operations.
Wages overseas are beginning to rise, Wathen said, which makes those other countries potentially less attractive to companies. Product safety concerns and civil unrest abroad may also be causing companies to rethink their overseas operations, Wathen said.
“I think we’re being rediscovered,” Wathen said.