



I didn’t know much about Elkhart, and why it had an unemployment rate roughly double the national rate. Was it the result of Bush administration policies, or something more fundamentally wrong with the structure of Elkhart’s economy? The answer was easy to find: Elkhart’s economy is too dependent on RV manufacturing, which historically suffers disproportionate losses in weak economic times.

Looking behind the unemployment numbers, it appears that the current spike is related to “the loss of recreational vehicle manufacturing jobs.” In fact, Elkhart county calls itself “The RV Capital” with 107 manufacturers making one of every two RVs. Not surprisingly, Elkhart is home to the RV Hall of Fame.

In a weak economy, sales of RVs suffer disproportionately, due to the high cost of purchase and the high cost of gas to run them. The RV industry is a primary beneficiary of “trickle down” economics in which people who can afford to spend tens or hundreds of thousands of dollars on an RV create manufacturing jobs. This leads to a boom and bust economy.

The RV industry, and Elkhart, goes through ups and downs along with the economy. In a 2005 interview, Dave Humphreys, then president of the Recreation Vehicle Industry Association, pointed out the cyclical nature of RV sales: “The business has always been cyclical, but at times has had especially deep troughs, such as in 1973-74 and 1979-80.” Humphreys went on to express concern that 2004 may represent a peak:

“Most people know that we had the best year in 26 years in 2004,” says Humphreys of the RVIA. “What’s not widely known is, is this a fluke?” Indeed, the long-term viability of the RV business is a matter of great importance to the Hoosier state. If the industry hit a sudden, deep slump, Humphreys says, “the economic impact on Indiana would be very negative.”

During the Clinton recession in 2000, Elkhart was hit hard:




The point is not to diminish the problems faced by unemployed workers today in Elkhart, but to understand that the cause is a local economy dependent on the economically sensitive RV industry. It’s been that way in Elkhart for several decades.

If Elkhart banks its future on the RV industry, then Obama’s plans will cause more pain; targeting the “rich” for higher taxes means less money to purchase RVs. Restricting oil drilling and taxing gasoline-using conduct in the name of lessening global warming means fewer people using RVs. Infrastructure projects won’t change this dynamic, because once the projects are over, there still won’t be jobs. The answers for Elkhart seem to be diversification of the local economy, and a growing national economy in which people keep more of their income and RV use is not punished. The “stimulus” plan and Obama’s economic policies will make things worse, not better.