Richmond.

• Author: Veramallay, Ashton I.

The Richmond-Connersville-New Castle (RCNC) area economy is sputtering given its interdependence with the national economy. The sluggish recovery is spilling over into the local economy in terms of employment, income, and growth.

The manufacturing sector continues to be affected in varying degrees by current economic conditions. Firms producing durable goods, such as wire, machine tools, heavy-duty truck parts, and other transportation-related equipment, have weak demands and below target sales. The machine tool industry has overcapacity and a lack of capital spending. Also, the new emission requirements for diesel truck engines translate into low new orders. Consequently, some firms have laid off employees, while others have maintained employment levels expecting to have a good year.

The rebates and zero or low interest rate financing offered by DaimlerChrysler, Ford, and General Motors are helping the automobile industry. Sales of both 2002 and 2003 model vehicles are at a robust pace, which helps to cushion the severity of the economic slump. With lean inventories and a fairly optimistic industry outlook, auto makers expect a turnaround.

Most manufacturers, however, expect orders, production level, investment, and employment to either increase or stay the same during the first half of 2003. They foresee little change in most indicators before the end of 2002.

On a positive note, Grand Vehicle Works of Union City reported that its subsidiary, Workhorse Customs Chassis, plans to manufacture diesel chassis for recreational vehicles in the closed Dana plant in Hagerstown. The company plans to make an initial investment of at least $3 million, which will create 100 new jobs at an average wage rate of $10.50 to $13.00 an hour for nonsalaried workers and $51,000 a year for salaried workers. This investment will give a tremendous boost to Hagerstown and the surrounding communities.

Employment growth in Wayne, Fayette, and Henry counties was slow in 2001 and 2002 (see Figure 1). In September 2002, the numbers of employed workers were 34,040 in Wayne, 9,310 in Fayette, and 22,520 in Henry, and the unemployment rates were 4.8 percent, 7.6 percent, and 5.1 percent, respectively. These unemployment rates were higher than the state rate of 4.6 percent but below the national rate of 5.4 percent, with the exception of Fayette County (see Table 1). Fayette County continues to experience high unemployment given its manufacturing intensity vis-a-vis the...