If there’s a silver lining for Kokomo’s decade-long malaise, it’s that the end may be in sight.
The City of Firsts has lost a quarter of its work force — some 12,000 workers — since the high-water mark of 2000.
But employment and wages have stabilized this year after plummeting in 2008 and 2009. For the first time since 2007, the local economy is adding jobs.
Major employer Chrysler Group has recalled 400 laid-off employees, and Abound Solar, a solar panel manufacturer, is set to add up to 850 jobs over the next five years in Tipton.
And most of the damage has already been done at Kokomo’s other major employer, General Motors Component Holdings.
Formerly part of Delphi Corp.’s parts manufacturing operations, the 200,000 square feet of manufacturing space GMCH now holds is largely empty. At the start of the decade, about 5,000 hourly unionized workers were employed at Delphi locally.
Jeff Owens, president of Delphi Electronics & Safety, said the company’s North American revenues dropped close to 50 percent after what Owens termed “the synchronized, global economic meltdown.”
Owens said the company has been forced to cut its infrastructure, size and cost base by half.
“That’s consolidation; that’s people reductions; that’s figuring out how to do things more efficiently and it’s narrowing the portfolio focus,” Owens said. “If you don’t size for the market, you go out of business.”
The Elkhart/Goshen and Kokomo areas had the fastest declining private-sector earnings in the country in 2009, as the auto sector barely survived.
That’s not surprising, given that Kokomo is more dependent than any other city in the United States on the American auto manufacturers.
More than a quarter of the jobs in Kokomo are auto jobs, and estimates suggest up to half of the work force is either directly or indirectly employed by the industry, according to Ball State University economics professor Michael Hicks.
Those unionized, high-wage auto jobs are the jobs Kokomo has lost by the thousands.
Now Delphi is beginning a new startup venture in Kokomo, thanks to an $89.3 million U.S. Department of Energy grant.
The venture is hoping to create and manufacture parts for the emerging, next-generation electric vehicle technology. But the UAW has thus far been shut out of the new operation. Delphi is outsourcing temporary labor, mainly at $10 to $12 an hour.
“The trend has been toward smaller, more nimble manufacturing operations,” Hicks said. “Whether it’s fair or not, firms are dodging the UAW ... [the union] is just viewed as a very painful experience for manufacturers.”
As difficult as times have been at Delphi, Chrysler’s Kokomo operations have been the bright spot.
This year the automaker announced it will invest $300 million in a new transmission line at the Indiana Transmission Plant, one of the four plants Chrysler operates in Kokomo.
Chrysler’s vice president Brian Harlow, head of powertrain manufacturing, said the turnaround in Kokomo is largely attributable to decisions by Fiat SpA CEO Sergio Marchionne to fully utilize Kokomo’s manufacturing capacity.
Those decisions, combined with the U.S. government’s $4 billion “bailout” loan, have kept some 4,500 workers employed at Chrysler in Kokomo.
“Certainly we know the reality is that we were almost dead. We were on a pathway that was quite a bit different, and probably wasn’t so favorable to Kokomo,” Harlow said. “That has just dramatically changed.”