Published: January 07, 2009 11:18 pm            

Mark Bennett: Like ‘Groundhog Day,’ 2009 economic forecast will resemble 2008

TERRE HAUTE — At least the Groundhog Day prediction duties haven’t been outsourced to a mongoose overseas. Punxsutawney Phil can relax.

Nonetheless, few sunny rays of optimism are expected at this year’s Groundhog Day Economic Forecast. Bob Guell has delivered the year-ahead outlook at that annual Terre Haute Chamber of Commerce event since this decade began. Guell’s 2009 address, scheduled for 7:30 a.m. Feb. 3 in Indiana State University’s Hulman Student Union, will be “at least as gloomy” as his 2008 version.

And that one was gloomy.

If there’s a bright side, Guell didn’t describe his upcoming speech as “gloomier.”

That’s because 2008 “was certainly worse than I expected, but not beyond what I feared,” the ISU economics professor said Wednesday.

Terre Haute had its own problems in 2008, topped by Pfizer’s decision to shutter its 60-year-old Vigo County plant. Still, many of the fiscal pains being felt here are the result of the imploding national economy. The struggling housing market, for example, doesn’t help the county’s new construction product manufacturers Boral Bricks and CertainTeed, Guell said.

Still, companies have the chance to distinguish themselves during the nation’s worst economic stretch since the 1930s.

“What we can hope for is that business will use this slack time to retool,” Guell said. He specifically mentioned a Tribune-Star report this week about ThyssenKrupp Presta, an automotive steering column manufacturer in the Vigo County Industrial Park. That firm plans to build a $2.75 million addition to its facility, where steering columns are made for Ford Motor Co.

Ford, GM and Chrysler, of course, have been staggered by declining sales. December sales for each of the Big Three were down more than 30 percent from a year ago, and federal bailout money kept GM and Chrysler afloat last month.

Investments such as that by ThyssenKrupp show “that businesses are not just looking at sales this year, but down the road,” Guell said.

“But you have to be in a good cash position to do that, because the credit market is still tight,” he added.

Several companies in the Wabash Valley connect to automakers, some more directly than others, from ThyssenKrupp to TRW in Marshall, Ill., Aisin Brake & Chassis in Terre Haute, and even the scrap metal recycling firms.

Understandable fears about the future by consumers compound the problems. “To a certain extent, people are uncertain about the future and discretionary purchases get delayed,” Steve Witt, executive director of the Terre Haute Economic Development Corp., said last month. A new car or flat-screen TV may have to wait until next Christmas.

The demise of any of the Big Three carmakers would be felt in Terre Haute in 2009. “Oh, yes, without question,” Witt said, “in a number of ways, and not only our suppliers but the automobile dealers,” too.

However, “compared to folks like those in Elkhart that’s tied to one particular industry, in those cases [Terre Haute would be better off] because ours is a pretty diverse economy,” Witt said of that troubled northern Indiana home of RV makers.

Employment in Terre Haute is spread throughout a variety of sectors, from auto parts suppliers to education, health care and advanced manufacturing, such as Sony. Because the national economic woes extend from housing to banking, automaking and retail services, the pain will still be felt here.

But, “I think we are going to be feeling it about the same as others. We are not beholden to the auto industry as many other communities in Indiana are,” Guell said.

That’s sort of good news. Still, even seemingly recession-proof employment such as education is no longer immune. The state may flat-line funding for primary and secondary schools, which, if prolonged, could affect staffing levels. Gov. Mitch Daniels also plans cuts for Indiana’s colleges, and ISU could be hit hardest, Guell said, because its enrollment has declined in recent years.

“It’s unclear what is going to happen in that sector of the economy,” he said.

The hope, now, is that an economic stimulus package by President-elect Barack Obama and Congress will trigger a recovery that could materialize by the latter part of this year. Tax cuts and business incentives could inspire renewed activity. A local example, Guell said, would be a resumption of the ready but on-hold Brown Avenue project.

With 25 days left until Groundhog Day on Feb. 2, things could change. A big change comes Jan. 20 when Obama takes office, and hopefully the long shadow of 2008 will begin to fade.

Mark Bennett can be reached at mark.bennett@tribstar.com or (812) 231-4377.

        

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