Panel: Dubois County's economy must diversify from furniture manufacturing

Nationally, the outlook is cloudier, largely because of political gridlock in Washington over how to reduce spending, a panel of Indiana University economists said Thursday afternoon at the Jasper Rotary Club’s annual economic forum. About 150 business leaders gathered at KlubHaus 61 to hear the experts’ analysis.

In recent years, Indiana’s unemployment rate has been stuck at about 8 percent. But in 2013, that fell to 6.9 percent as the economy gained momentum. Economists predict that in 2014, some 50,000 jobs will be created in the state. In 2013, Indiana gained about 43,000 jobs. By the end of the year, the state’s jobless rate will drop to 6 percent, said Jerry Conover, director of the Indiana Business Research Center at IU’s Kelley School of Business. But most of the job growth will be in the technology sector rather than furniture manufacturing, which has long been a staple of the local economy.

Mike Cummings, interim president of Dubois Strong, the county’s economic development group, said the county has shed 1,200 manufacturing jobs since 2007, just before the Great Recession. The local furniture industry has shrunk by 2,100 jobs since 2001.

“We’ve talked for a long time about the need to diversify the local economy,” Cummings said. “It’s a conversation that we’ve been having for decades.”

Still, the county’s 4.2 percent unemployment rate is the lowest in the state, and manufacturing makes up about a third of the local gross domestic product. But for the county to remain strong, other industries must begin to take shape, Cummings said.

Jasper Mayor Terry Seitz, who attended the forum but did not serve on the panel, has said the area has more jobs than people to fill them. MasterBrand Cabinets has announced it will add 135 jobs, and Seitz estimates that 700 local jobs are either available or will be available soon. Cummings said officials need to attract more people to live and work in Dubois County and plans for redeveloping Jasper’s downtown should help.

“We really see a need for workforce population growth,” Cummings said. “Our local companies have indicated there’s some hesitation in investing in facilities and adding jobs here because of fear of finding labor. That’s a very real challenge. It hinders our growth as a community, and it hinders the growth of our companies.”

After the forum, Seitz said Meyer Distributing and Stens Corp. are examples of economic diversification and noted the local manufacturing sector is more diverse than people give it credit for. Not everything is tied to furniture, Seitz said, citing companies such as Kimball Electronics and Jasper Engines & Transmissions.  

The national economic picture for 2014 is mixed. The GDP will expand at an average rate of about 3 percent, but growth from quarter to quarter will be uneven. The U.S. economy will generate about 2.5 million new jobs, and unemployment will drop to about 6 percent by year’s end.

But the prospect of higher interest rates and deadlock over government spending has some economists revising their growth expectations. Willard Witte, co-director of IU’s Center of Econometric Model Research, said the level of spending is not sustainable and must be reduced.

“One way is just to spend less, and politically we just can’t do that right now,” said Witte, referring to the impasse in Washington over how to reduce spending.

Another way to decrease spending is to grow the rest of the economy at a faster rate than the public sector.

“Politically, that might be more feasible,” Witte said.

But that will be difficult. The working age population is shrinking as more baby boomers retire, and regulatory burden has hurt productivity growth.

“So there’s a lot of reasons why prospects for growth looking up ahead aren’t real good,” Witte said.