Richmond.

• Author: Veramallay, Ashton I.
• Position: Economic outlook for Richmond, Indiana metropolitan area - Statistical Data Included

The Richmond-Connersville-New Castle (RCNC) area economy can expect a rebound in 2002. The erstwhile slowdown or current downturn in the United States economy is affecting local employment, income and growth. The manufacturing sector is in recession. Manufacturers in October 2000 turned in their worst performance since February 1991, when the United States was mired in its last recession. The National Association of Purchasing Management noted that its manufacturing activity index sank to 39.8 from 47 in September, the 15th consecutive month of decline. An index above 50 comprises growth in manufacturing, while a figure below 50 shows contraction.

At the local level, there was a loss of a few hundred jobs, particularly in durable goods manufacturing, such as wire, machine tools, heavy trucks and other transportation-related equipment. Consequently, companies will have poor profit performance, which in turn will affect their capital spending. Prior to September 11th, companies were prepared for a pared-down cost structure because of lower commodity and energy prices, cheaper borrowing costs, and slower wage growth. They now face, in addition to weak demand, a new layer of costs because of increased security measures and distribution problems. It is important to note that the manufacturing sector is the backbone of RCNC's economy, accounting for at least 25 percent of its total employment.

Given the manufacturing situation, employment growth in Wayne, Fayette and Henry counties was weak in 2000, with unemployment rates running higher than the state rate of 3.2 percent (see Table 1).

Compared to a year ago, there has been a steady increase in RCNC's unemployment rates (see Figure 1). However, two existing businesses, Fickenscher America and Delta Entertainment, are building new facilities costing $11 million in the Midwest Industrial Park. One will produce multi-shot injection molding to create movable plastic parts for automotive and consumer products, while the other will produce compact discs and digital video discs for the entertainment industry. Both businesses expect to create about 90 new jobs. The employment picture is expected to improve with a rebound in economic activity during 2002.

[FIGURE 1 OMITTED]

The services sector, unlike manufacturing, is holding steady. There is growth in business and personal services, transportation and public utilities, and finance, insurance and real estate. There is also increased activity in food...