Route to Recovery

A trip through the epicenters of the recession

America’s Route to Recovery: Part Two – A New Revolution

Dec 29, 2009 22:28 UTC

For the Reuters multimedia project Route to Recovery, a team of journalists toured America to examine the impact of the recession and posted their reports on reuters.com. For the last installment in the series, reporter Nick Carey has written an extended overview of the challenges and opportunities facing the country.  The second part of this three-part report is below. Click here for part one.

Leslie Taito is executive director of Rhode Island Manufacturing Extension Services (RIMES), a nonprofit that provides consultation for small and medium-sized manufacturers in Rhode Island, a state of 1 million people.

Rhode Island was the home of America’s first mechanized cotton mill, but since Taito arrived 16 years ago, the number of manufacturers here has fallen to 1,945 from 2,800. Still, she believes that all of those that are left can be helped to survive and thrive — and the best way is to get smart and not try to compete with low-cost Chinese producers.

“Manufacturers have to specialize and find a niche where they develop high-end goods that are not sold just based on cost,” Taito said. “Sure, China can make it cheaper than we can,” she said, while weaving in and out of traffic en route through the heart of Providence. “But what they don’t have is the design or engineering capabilities that we do.”

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Maria Montero carries plastic products for quality control inspection at Blow Molded Plastics in Pawtucket, Rhode Island November 17, 2009.   REUTERS/Brian Snyder

One of the companies that RIMES has worked with in the past is Pawtucket-based Blow Molded Specialties, which makes products from hot plastic that is blown into molds where it sets. Its clients are predominantly in the healthcare sector.

President and majority owner Tom Boyd describes how the company’s largest customer switched production of a basic product to Mexico because it could be made there for 2 cents apiece instead of 8 cents in the United States.

That company had accounted for some 35 percent of business. “That was nearly the end of us,” Boyd said with a wry smile.

So instead of trying to compete on low-cost products, Boyd’s company specializes in high-end, complicated and intricate products, and even develops products for customers.

In the company’s meeting room, he shows off some of the firm’s products including one which looks almost like a plastic accordion and is about the same size, with evident pride.

This, he explains, is a plastic bellows his firm developed for a healthcare company, whose name he says he cannot divulge. It has a special function. Conventional practice in organ transplants has been to ship organs on ice. But Boyd says it has been found that a better way to ship organs is to keep them functioning, and the bellows he holds in his hands is part of a device to keep a set of lungs pumping while in transit.

Asked how much Blow Molded charges for a pump like this, Boyd shrugs his slight shoulders. “Maybe a few dollars each. And we only sold a few of them.”

But then he leans forward with right eyebrow and right forefinger raised. “Ah, but you see, the money’s not in the product,” he said, his grin widening. “The money’s in the engineering. We bill our customers for the development work we do.”

Communities around the country say they want to attract small firms like Blow Molded rather than focus on major corporations, for the simple reason that when a giant plant shuts down, it is almost impossible to replace the jobs lost.

The classic example is Wilmington, Ohio, where empty store fronts on Main Street are grim testimony to what happened when DHL axed nearly 10,000 jobs.

“When a big company like that goes, it leaves a very large hole to fill,” said Mayor David Raizk (pronounced “risk.”)

“I’d rather see 200 small companies with 50 employees each than one big one,” he said. “You can lose one, two or even 10 of those and find a way to replace them. Big companies are great when they’re in town, but when they leave they devastate communities.”

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A pelican flies near a fisherman in Pensacola, Florida November 11, 2009. REUTERS/Carlos Barria

One such small firm is Computer Technology Solutions Inc, the largest privately-held software firm in Alabama, which has added some 40 jobs this year and now employs 150 people. “If that’s what we can do in a recession, imagine how we can do when the economy improves,” said president Sanjay Singh.

CTS got its start in a business incubator run by the University of Alabama in Birmingham. Singh said that unlike big corporations — which tend to be bureaucratic, slow-moving and inclined to withhold responsibility from young employees — CTS gives its 20-something employees multimillion-dollar projects to run on their own.

“If you give young people responsibility, they deliver,” he said. “We don’t hang over our employees’ shoulders waiting for them to get things done, we just let them do it.”

GREEN ECONOMY A LONG HAUL
There are great expectations that alternative energy or the “green economy” will help move America forward.

According to Lisa Frantzis, managing director for energy at Navigant Consulting Inc, in 2009, 7,000 megawatts of wind power was installed in America with the creation of 70,000 jobs — 50,000 direct and indirect jobs, plus 20,000 service-related jobs. Solar power saw 300 megawatts installed with the creation of 60,000 jobs.

Jay Paidipati, a Navigant managing consultant who works with Frantzis, said because of the industry’s breadth and relative youth, it is hard to make forecasts. “I would feel comfortable saying that the number of green jobs will be in the millions,” he said. “Just how many millions, I don’t know.”

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Mesquite Lake Cattle Manure Power Plant is seen in El Centro, California, November 3, 2009.  REUTERS/Lucy Nicholson

It will be years, however, before that potential is realized. One of the main problems is the mass of rules and regulations that make building plants a lengthy process.

Imperial County in southern California has hit on a novel way to get around red tape, using a provision of state law that allows local authorities to streamline the approval process for building a plant, as long as it is under 50 megawatts.

This loophole enables officials to handle the approval process in as little as a year, compared to several years at the state level.

“Getting anything done in California is hard,” said Imperial Valley Economic Development Corporation CEO Tim Kelley, at his office in El Centro some 100 miles (160 km) east of San Diego. “But it is less hard to get it done here.”

This area has 360 days of sun a year and has suitable geological conditions for geothermal power — there are 10 such plants already. Thirty others for solar, geothermal and wind facilities, are in the process of acquiring permits.

Red tape is not the only challenge.

Paul Rich is chief development officer at Deepwater Wind LLC, which aims to develop America’s first offshore wind farm, in Rhode Island. The farm, which would eventually provide 15 percent of Rhode Island’s electricity, should come in two phases. The first test phase with six to eight turbines could be installed off the coast by 2012. By around 2015 the wind farm would contain around 100 wind turbines.

Rich described the coast between Maine and Maryland as the “Saudi Arabia of wind,” predicting an “enormous, exponential leap in jobs, manufacturing and infrastructure.”

Part of the reason for the long lead time is the need for extensive tests of local wind conditions, he said.
“It won’t happen overnight,” Rich said. “We are trying to create a truly new industry here and it has to be done right.”

“A far bigger concern for us is finding a qualified workforce to run and maintain the wind farm when it becomes operational.”

In blighted states like Michigan, many former manufacturing workers are already training for green jobs, even though relatively few have been created.

Matthew Derra, 41, lost his job at struggling auto supplier American Axle & Manufacturing Holdings Inc in July 2008. Now he is taking an associate degree in renewable energy and wants to find a job maintaining wind turbines.

“There’s nothing out there in my old field of work,” he said. “And there will be thousands of people out there chasing every green job, but I have to try.”

“I can’t just sit home and watch television.”

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April Metts watches television at her apartment in Providence, Rhode Island November 18, 2009.  Metts was homeless for several years before getting into her subsidized apartment as part of the Housing First RI initiative.   REUTERS/Brian Snyder

Even in California, which has America’s most aggressive climate change regulations, just 159,000 of the state’s 18 million jobs are considered “green” as of the start of 2008, according to public policy group Next 10.

Still, there are encouraging signs that money is flowing into renewable energy even in a sluggish economy.

Bill Gibson, is a business broker and principal of Gibson & Associates Inc in Pensacola, Florida. Gibson finds buyers for companies that want to sell.

He noted that companies selling luxury items are having trouble finding buyers because gun-shy banks won’t lend for that kind of investment, but he has noticed a lot more interest in renewable or alternative energy firms.

“There are definitely going to be haves and have-nots,” Gibson said. “Green energy is part of the future.”

The green energy industry is also seen as an opportunity for manufacturing firms to retool.

“What concerns me is when I hear people talking about manufacturing in the past tense,” said Virg Bernero, mayor of Lansing. “If we want wind turbines, someone here should manufacture them.”

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The Vulcan statue is seen at Vulcan Park in  Birmingham, Alabama November 14, 2009. The Vulcan statue is a symbol of old times at the iron industry in Birmingham.  REUTERS/Carlos Barria

GEEKS AT THE TABLE
Laurie White, president of the Greater Providence Chamber of Commerce, keeps a board covered in bad news — headlines from The New York Times, The Washington Post, The Boston Globe and The Economist about how badly the economy of the state has been faring. Rhode Island’s unemployment rate was 12.7 percent in November, the second highest in the country after Michigan.

“Our problems have made not just national but international headlines,” White said. “That motivates me to find a new way forward.”

Rhode Island is pinning its hopes on a strategy dubbed “Strengthening Providence’s Knowledge Economy.” It has involved bringing together local and state government, the Chamber of Commerce, the Rhode Island Economic Development Corporation (RIEDC) and hundreds of small hi-tech software companies.

“The geeks have finally been offered a seat at the table,” said business consultant Jack Templin.

White said there was an easy explanation: “The geeks are just about the only ones creating jobs right now.”
Companies like Working Planet, which handles algorithmic online market research for its clients, are now at the table.

“Up until a few years ago the chamber was focused on major companies and its existing membership base,” said Working Planet Marketing Group Inc president and co-founder Soren Ryherd. “Over the past three years the chamber has done an about face and is now also about the smaller companies that are creating jobs.”

“We have also become more organized because we need to reach the local universities so we can find and retain top talent,” he added.

Mike Saul is the interim executive director of the RIEDC and has spent much of his career as a “turnaround guy” taking poorly performing companies and making them thrive. He wants to do the same here, in part because three of his four children, like many of the state’s offspring, live outside Rhode Island because there was no work here for them.

“In any turnaround that is going to work you have to ask where is the enterprise value that I can push forward,” he said. According to Saul, the state’s education system and its wind potential create much of its enterprise value.

“Rhode Island’s attempts at economic development have been episodic in the past, but this time everyone is on the same page,” Saul said. “A crisis makes things happen. It helps individuals reinvent themselves and will help this country reinvent itself.”

Part Three – The Mind Factory

ROUTETORECOVERY/

A U.S. flag decal is stuck to the window in a door to the Harrington Hall homeless shelter in Cranston, Rhode Island November 18, 2009.    REUTERS/Brian Snyder

A NEW REVOLUTION
Leslie Taito is executive director of Rhode Island Manufacturing Extension Services (RIMES), a nonprofit that provides consultation for small and medium-sized manufacturers in Rhode Island, a state of 1 million people.
Rhode Island was the home of America’s first mechanized cotton mill, but since Taito arrived 16 years ago, the number of manufacturers here has fallen to 1,945 from 2,800. Still, she believes that all of those that are left can be helped to survive and thrive — and the best way is to get smart and not try to compete with low-cost Chinese producers.
“Manufacturers have to specialize and find a niche where they develop high-end goods that are not sold just based on cost,” Taito said. “Sure, China can make it cheaper than we can,” she said, while weaving in and out of traffic en route through the heart of Providence. “But what they don’t have is the design or engineering capabilities that we do.”
One of the companies that RIMES has worked with in the past is Pawtucket-based Blow Molded Specialties, which makes products from hot plastic that is blown into molds where it sets. Its clients are predominantly in the healthcare sector.
President and majority owner Tom Boyd describes how the company’s largest customer switched production of a basic product to Mexico because it could be made there for 2 cents apiece instead of 8 cents in the United States.
That company had accounted for some 35 percent of business. “That was nearly the end of us,” Boyd said with a wry smile.
So instead of trying to compete on low-cost products, Boyd’s company specializes in high-end, complicated and intricate products, and even develops products for customers.
In the company’s meeting room, he shows off some of the firm’s products including one which looks almost like a plastic accordion and is about the same size, with evident pride.
This, he explains is a plastic bellows his firm developed for a healthcare company, whose name he says he cannot divulge. It has a special function. Conventional practice in organ transplants has been to ship organs on ice. But Boyd says it has been found that a better way to ship organs is to keep them functioning, and the bellows he holds in his hands is part of a device to keep a set of lungs pumping while in transit.
Asked how much Blow Molded charges for a pump like this, Boyd shrugs his slight shoulders. “Maybe a few dollars each. And we only sold a few of them.”
But then he leans forward with right eyebrow and right forefinger raised. “Ah, but you see, the money’s not in the product,” he said, his grin widening. “The money’s in the engineering. We bill our customers for the development work we do.”
Communities around the country say they want to attract small firms like Blow Molded rather than focus on major corporations, for the simple reason that when a giant plant shuts down, it is almost impossible to replace the jobs lost.
The classic example is Wilmington, Ohio, where empty store fronts on Main Street are grim testimony to what happened when DHL axed nearly 10,000 jobs.
“When a big company like that goes, it leaves a very large hole to fill,” said Mayor David Raizk (pronounced “risk.”)
“I’d rather see 200 small companies with 50 employees each than one big one,” he said. “You can lose one, two or even 10 of those and find a way to replace them. Big companies are great when they’re in town, but when they leave they devastate communities.”
One such small firm is Computer Technology Solutions Inc, the largest privately-held software firm in Alabama, which has added some 40 jobs this year and now employs 150 people. “If that’s what we can do in a recession, imagine how we can do when the economy improves,” said president Sanjay Singh.
CTS got its start in a business incubator run by the University of Alabama in Birmingham. Singh said that unlike big corporations — which tend to be bureaucratic, slow-moving and inclined to withhold responsibility from young employees — CTS gives its 20-something employees multimillion-dollar projects to run on their own.
“If you give young people responsibility, they deliver,” he said. “We don’t hang over our employees’ shoulders waiting for them to get things done, we just let them do it.”

GREEN ECONOMY A LONG HAUL
There are great expectations that alternative energy or the “green economy” will help move America forward.
According to Lisa Frantzis, managing director for energy at Navigant Consulting Inc, in 2009, 7,000 megawatts of wind power was installed in America with the creation of 70,000 jobs — 50,000 direct and indirect jobs, plus 20,000 service-related jobs. Solar power saw 300 megawatts installed with the creation of 60,000 jobs.
Jay Paidipati, a Navigant managing consultant who works with Frantzis, said because of the industry’s breadth and relative youth, it is hard to make forecasts. “I would feel comfortable saying that the number of green jobs will be in the millions,” he said. “Just how many millions, I don’t know.”
It will be years, however, before that potential is realized. One of the main problems is the mass of rules and regulations that make building plants a lengthy process.
Imperial County in southern California has hit on a novel way to get around red tape, using a provision of state law that allows local authorities to streamline the approval process for building a plant, as long as it is under 50 megawatts.
This loophole enables officials to handle the approval process in as little as a year, compared to several years at the state level.
“Getting anything done in California is hard,” said Imperial Valley Economic Development Corporation CEO Tim Kelley, at his office in El Centro some 100 miles (160 km) east of San Diego. “But it is less hard to get it done here.”
This area has 360 days of sun a year and has suitable geological conditions for geothermal power — there are 10 such plants already. Thirty others for solar, geothermal and wind facilities, are in the process of acquiring permits.
Red tape is not the only challenge.
Paul Rich is Chief Development Officer at Deepwater Wind LLC, which aims to develop America’s first offshore wind farm, in Rhode Island. The farm, which would eventually provide 15 percent of Rhode Island’s electricity, should come in two phases. The first test phase with six to eight turbines could be installed off the coast by 2012. By around 2015 the wind farm would contain around 100 wind turbines.
Rich described the coast between Maine and Maryland as the “Saudi Arabia of wind,” predicting an “enormous, exponential leap in jobs, manufacturing and infrastructure.”
Part of the reason for the long lead time is the need for extensive tests of local wind conditions, he said.
“It won’t happen overnight,” Rich said. “We are trying to create a truly new industry here and it has to be done right.”
“A far bigger concern for us is finding a qualified workforce to run and maintain the wind farm when it becomes operational.”
In blighted states like Michigan, many former manufacturing workers are already training for green jobs, even though relatively few have been created.
Matthew Derra, 41, lost his job at struggling auto supplier American Axle & Manufacturing Holdings Inc <AXL.N> in July 2008. Now he is taking an associate degree in renewable energy and wants to find a job maintaining wind turbines.
“There’s nothing out there in my old field of work,” he said. “And there will be thousands of people out there chasing every green job, but I have to try.”
“I can’t just sit home and watch television.”
Even in California, which has America’s most aggressive climate change regulations, just 159,000 of the state’s 18 million jobs are considered “green” as of the start of 2008, according to public policy group Next 10.
Still, there are encouraging signs that money is flowing into renewable energy even in a sluggish economy.
Bill Gibson, is a business broker and principal of Gibson & Associates Inc in Pensacola, Florida. Gibson finds buyers for companies that want to sell.
He noted that companies selling luxury items are having trouble finding buyers because gun-shy banks won’t lend for that kind of investment, but he has noticed a lot more interest in renewable or alternative energy firms.
“There are definitely going to be haves and have-nots,” Gibson said. “Green energy is part of the future.”
The green energy industry is also seen as an opportunity for manufacturing firms to retool.
“What concerns me is when I hear people talking about manufacturing in the past tense,” said Virg Bernero, mayor of Lansing. “If we want wind turbines, someone here should manufacture them.”

GEEKS AT THE TABLE
Laurie White, president of the Greater Providence Chamber of Commerce, keeps a board covered in bad news — headlines from The New York Times, The Washington Post, The Boston Globe and The Economist about how badly the economy of the state has been faring. Rhode Island’s unemployment rate was 12.7 percent in November, the second highest in the country after Michigan.
“Our problems have made not just national but international headlines,” White said. “That motivates me to find a new way forward.”
Rhode Island is pinning its hopes on a strategy dubbed “Strengthening Providence’s Knowledge Economy.” It has involved bringing together local and state government, the Chamber of Commerce, the Rhode Island Economic Development Corporation (RIEDC) and hundreds of small hi-tech software companies.
“The geeks have finally been offered a seat at the table,” said business consultant Jack Templin.
White said there was an easy explanation: “The geeks are just about the only ones creating jobs right now.”
Companies like Working Planet, which handles algorithmic online market research for its clients, are now at the table.
“Up until a few years ago the chamber was focused on major companies and its existing membership base,” said Working Planet Marketing Group Inc president and co-founder Soren Ryherd. “Over the past three years the chamber has done an about face and is now also about the smaller companies that are creating jobs.”
“We have also become more organized because we need to reach the local universities so we can find and retain top talent,” he added.
Mike Saul is the interim executive director of the RIEDC and has spent much of his career as a “turnaround guy” taking poorly performing companies and making them thrive. He wants to do the same here, in part because three of his four children, like many of the state’s offspring, live outside Rhode Island because there was no work here for them.
“In any turnaround that is going to work you have to ask where is the enterprise value that I can push forward,” he said. According to Saul, the state’s education system and its wind potential create much of its enterprise value.
“Rhode Island’s attempts at economic development have been episodic in the past, but this time everyone is on the same page,” Saul said. “A crisis makes things happen. It helps individuals reinvent themselves and will help this country reinvent itself.”

COMMENT

I read one comment saying that their 2 children on graduation will have $100K in education debts.
Here in Sweden we can study right thru university completely free of charge, and even get a very generous monthly allowance to help with books and food etc etc

Posted by George | Report as abusive

Four years after Katrina, high-cost insurance dogs Gulf Coast

Nov 11, 2009 15:09 UTC

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GULFPORT, Mississippi – It’s been more than four years since Hurricane Katrina lifted the casino barges of this Gulf Coast town at the end of August 2005 and dumped them on the shore, yet locals complain they are still paying a high financial price for that cataclysmic event.

The problem this area faces comes to one that is global – a lack of available credit – and one that is entirely local – a lack of available insurance.

“Insurance is a big issue here,” said Brian Sanderson, president of the Gulf Coast Business Council. “This has been a huge challenge to developing this area to its full potential.”

The local economy here has been sheltered to a certain extent by the presence of two large military bases in the neighborhood, but it is not immune. Unemployment in the Gulfport area is just under 8 percent, versus a U.S. average of 10.2 percent as of October.

“Yes, unemployment is lower than the national average here, but people are still hurting,” said Dave Dennis, president of Specialty Contractors & Associates Inc.

Sanderson said that the local long-term strategy for this part of the Gulf is to become a “Tier One” tourism destination. To attain that goal, the area needs businesses to come in and set up shop. But the cost of insurance effectively puts small businesses off from coming here.

“Insurance is generally available but it is not affordable,” Dennis said.

Insurance against wind damage is the main problem. Dennis said that he is currently paying  310 percent more to insure his home than he did before Hurricane Katrina hit.

“I’m one of the lucky ones who can afford it,” he said. “The cost of insurance means that the local real estate market is not reaching its full potential.”

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And he said that the biggest vendors of the contractor he works for are insurers, instead of any company that provides raw materials.

Gulfport Mayor George Schloegel said that after a major event like Katrina, it was only natural that insurers would be wary of this market.

“After a major catastrophe it generally takes years to get back to the norm,” he said. “As time goes by the market will come back. Insurance companies are always looking for customers and there are lots of customers around here who want insurance.”

Negotiations are underway with insurers on getting back into this market. Sanderson said that insurers need to come and see how construction on the Gulf Coast has changed since Katrina, as buildings near the shore are now usually built on stilts so that tidal surges in storms cannot cause extensive damage.

But there is still some way to go.

“Insurance is the key issue on the Gulf Coast that has kept us from a full economic rebound,” Dennis said.

Pictures by Carlos Barria

Click here for more stories from the Route to Recovery

In Austin’s office property market, waiting for something to happen

Nov 9, 2009 18:26 UTC

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AUSTIN, Texas – Chris Perry says that virtually everything that is wrong with Austin’s office property market is global.

“The problems we’re facing are not local in the making,” said Perry, a realtor at AQUILA Commercial, LLC.

The freezing up of the credit markets following the implosion of Lehman Brothers in September 2008 plus the virtual collapse of the global financial sector have left this market in suspended animation. That’s occurred even though Austin has lower unemployment than the national average and none of the structural problems of northern industrial cities like Detroit.

Austin’s housing market has also got off lightly. While some parts of America have seen steep drops in property prices, the median home price in Austin was down just 0.1 percent in the second quarter.

But nothing is happening in the office property market here.

“We haven’t seen a single major transaction in this area this year because no one really knows what properties are really worth,” said Michael Kennedy, president of commercial real estate company Commercial Texas.

Gary Farmer, president of title insurance firm Heritage Title Company of Austin Inc, described the office property market as “constipated.”

“The capital markets are in disarray, debt is hard to come by so everyone is waiting for the market to settle and find out what is the new normal,” he said. “Things are pretty much frozen right now.”

Nationally, some analysts believe that the office property market, and commercial real estate as a whole, has yet to truly suffer following the crisis in U.S. residential real estate.

According to Perry, part of the problem in the office market is that sellers and prospective buyers have vastly different expectations.

“There is a major disconnect between what sellers think they can get for a property and what the vultures out there think they can pay for a property,” he said. “The real value lies somewhere in between, but no one has got there yet.”

Perry said there are doubtless financially distressed office property owners out there who are holding on for now, but cannot do so forever if the market doesn’t pick up.

“There has yet to be some kind of reckoning in the market,” he said. “The majority of people in this business still think that the worst is yet to come.”

Photo by Lucy Nicholson

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Struggling against the stigma of unemployment

Nov 9, 2009 16:34 UTC

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BELLA VISTA, Arkansas – Until he lost his job back in August, Jimi Nash, 32, had not given a job interview since he left high school. Now, the tile worker is willing to take any job he can get.

“If I have to I’ll take a job making donuts. It’s tough to lower myself to that level. But a job’s a job,” he said in his home in Bella Vista. “Since I lost my job I have had bouts of depression and I have felt worthless.”

Jimi, his wife Jamie and their two daughters moved here last year from Arizona because work dried up as the housing crisis killed off construction projects where Jimi could lay tiles.

“Jimi’s salary basically went from $70,000 to $20,000 over a two year period,” said Jamie, 31. “It was a difficult choice to make because all our family is in Arizona, but there was no work for Jimi so we moved here.”

“We did what we thought was best for our family.”

The family moved to Bella Vista, not far from Bentonville where retail giant Walmart has its headquarters, in the summer of 2008. Their run of bad luck continued when Jimi broke his leg in December and – because he is self-employed and does not qualify for unemployment benefits – they burned through their savings in the four months he was unable to work.

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Jimi went back to work in April, but lost his job in August. Since then he has been unable to get work. They are now reliant on Jamie’s salary from her job as a nursing assistant.

“We just refinanced the mortgage and had a month where we didn’t have to make a payment,” she said. “If we didn’t have that break, we would have fallen behind on the mortgage.”

The family has stopped eating out and has pared back their budget to necessities. They now use credit cards for emergencies.

“We never really thought anything about eating about before,” Jimi said. “Now we’re really grateful to have a meal out, even if it’s Taco Bell.”

Jimi has sent out dozens of job applications and attended a job fair, but said that everywhere that he applies there are multiple applicants chasing the same job. The unemployment rate in Arkansas is 7.1 percent, lower than the national average of 10.2 percent, but Jimi said competition for the few jobs around is fierce.

He said that the stigma of being out of work has been the hardest thing for him to deal with.

“All I’ve ever known is working hard to feed my family,” he said. “Now I wonder how friends and family look at me and what they think of me.”

“I’m afraid they look down on me.”

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The Nashes say they are hanging on for now. Friends have invited them over to celebrate Thanksgiving, which would otherwise be a major expense for them. But the holidays follow soon after.

“We’re trying to even think about Christmas right now,” Jamie said.

Photos by Lucy Nicholson

Click here for more Route to Recovery

COMMENT

I am doing better now I got a job as a security guard.the pay is not good but im happy to finally have a job. I am still doing some tile work it makes me happy. there is hope for everyone if u keep tring and dont give up

Posted by James Nash | Report as abusive

Austin feels the economy’s pain, but to a lesser degree

Nov 6, 2009 18:48 UTC

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AUSTIN, Texas — To an outside observer, it seems Austin has taken a light hit from the recession.

Unemployment here was only 7.2 percent in September, compared with a national average of 9.8 percent and 8.2 percent in the state of Texas.

“As bad as our unemployment numbers are by our standards, we have been quite lucky compared to much of the rest of the country,” said Dave Porter, senior vice president for economic development at the Austin Chamber of Commerce.

And while the housing crisis saw median house prices in the United States down 15.6 percent in the second quarter the median price in Austin was down just 0.1 percent on the year at $194,000 (after sliding to $182,300 in the first quarter), according to the National Association of Realtors.

But when it comes to economic pain, it’s all a matter of perspective.

“Our unemployment numbers are at record levels and what is worrying is that the jobless rate has been above 7 percent for much of the year,” said Angelos Angelou of Austin-based AngelouEconomics, which provides economic development consulting services. “This is the hardest recession we’ve experienced so far.”

Retail sales are down 11 percent on the year, which Angelou said indicates that “people are either saving their money or are concerned about losing their jobs.”

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“We haven’t seen a single major transaction in this area this year because no one really knows what properties are really worth,” said Michael Kennedy, president of real estate company Commercial Texas. “What’s affecting us is the same thing that is affecting the whole world right now.”

Austin has grown rapidly in recent years – the population grew 7.6 percent to 709,893 between 2000 and 2006 – thanks to a combination of government jobs (it’s the capital of Texas), education jobs related to the University of Texas and hi-tech companies.

Computer maker Dell Inc was founded here by Michael Dell while he was still at the University of Texas in 1984. IBM, Samsung and Apple all have large operations here. The city consistently ranks as one of the most attractive locations for companies and entrepreneurs to set up shop in the United States.

According to Angelou, Austin’s growth has in large part been based on an inflow of people from elsewhere.

This year he estimates the population will grow by 45,000, down from growth of 66,000 in 2007.

“For meaningful growth we need more people to come here,” he said.

Mark Dotzour, chief economist at the Real Estate Center at Texas A&M University, said that what may have dissuaded more people from moving here is that their homes have lost so much value they are reluctant to sell.

“For people whose homes have lost 20 percent to 30 percent in value, moving in this market is tough,” he said. “But once Austin starts adding jobs again, I think we’ll see some people in badly affected markets decide to walk away from their homes and move here anyway.”

Photos by Lucy Nicholson

COMMENT

“According to Angelou, Austin’s growth has in large part been based on an inflow of people from elsewhere. “For meaningful growth we need more people to come here,” he said.”

This economist must be an Aggie. Only Aggies state the obvious and consider it enlightening.

Jonh

Posted by JMKeynes | Report as abusive

Imperial Valley strives to be small-scale renewable energy capital

Nov 5, 2009 15:49 UTC

EL CENTRO, California – At a time when alternative energy and “green jobs” have become a significant talking point under the administration of Barack Obama, Imperial Valley is pushing to make it a reality.

The Valley –- which locals in this part of southern California also call Imperial County — already has 10 geothermal plants in operation with a combined capacity of around 330 megawatts. Geothermal energy,  extracting power from underground heat, is a constant and sustainable form of generating electricity.

“This is going to be a great opportunity for the Imperial Valley,” which has a high unemployment rate, said Mark Gran, vice president of community relations at CalEnergy. “We’re going to be the renewable energy capital of the world.”

Potential geothermal or other renewable energy projects need to go through a lengthy approval process. But Imperial County officials have streamlined that process to help companies get permits far quicker, in particular for power plants under 50 megawatts. The state of California has more say in larger projects and has a reputation for being a stickler for due process.

“Getting anything done in California is hard,” said Imperial Valley Economic Development Corporation CEO Tim Kelley. “But it is less hard to get it done here.”

Apart from 360 days of sun a year and suitable geological conditions for geothermal power, the state has mandated that 33 percent of its electricity must come from renewable sources by 2020. Kelley says  companies are falling over themselves to come to Imperial County, where they know the will be welcome.

Some 30 other renewable energy projects — geothermal, solar and wind — are in the permitting process in Imperial County. One geothermal plant has just been built and construction of another will begin next year.

“We have found the optimal way through the process,” said El Centro city manager Ruben Duran. “We recommend to companies that if they want to get approval faster they follow that path. They don’t have to follow those recommendations, but we’ve found that the system works.”

Local officials hope that renewable energy will help lower rising unemployment and help diversify the economy of this rural, largely agricultural community. But one problem Imperial County faces is transmission – getting the power to customers in major markets like San Diego, around 100 miles to the west on the Pacific coast.

“It’s one thing to produce the power, but we need to be able to deliver it to customers,” Kelly said.

The existing infrastructure can handle all of the capacity that the 30 projects currently in the pipeline would require, but not much more.

“Transmission moving forward is going to be a big concern,” Duran said.

Sue Giller, a partner at Valley Solutions Group Inc, which handles public relations for some companies in the area, including one that just opened, said far more needs to be done by California and around the United States to make renewable energy as much of a priority as it is in other countries.

“It’s amazing to me that although Germany doesn’t get much sun that the Germans lead the world in solar technology,” she said. “Something needs to be done to change that.”

For more Route to Recovery stories, click here

(Picture: President Barack Obama speaks about new energy in front of solar panels at the Thunderbirds Hangar at Nellis Air Force Base in Las Vegas, Nevada May 27, 2009.  REUTERS/Jason Reed)

COMMENT

I like this “Amtrak- road to recovery” feature. It is a clever, useful and integral way for Amtrak to get the word out about its services while providing useful news and interesting stories. I wish Verizon and its ilk were that clever and willing to participate in a more up-to-date pluralistic fashion.

The most unemployed town in America — or is it?

Nov 4, 2009 15:14 UTC

ROUTE-RECOVERY/If you’re looking for ground zero in America’s longest and deepest recession, El Centro in southern California appears on first glance to fit the bill.

The unemployment rate here and for the whole of Imperial County hit 30.1 percent in September, the highest rate in the United States. Locals say there is no denying that El Centro has suffered as a result of the recession and that jobs are more scarce in an area where agriculture is the backbone of the community and forms 25 percent of the local economy.

“We’ve always had high unemployment, but nothing like this,” said Judith Klein-Pritchard, director of the Center for Family Solutions of Imperial Valley, which provides intervention for domestic violence and shelter services in the area.

However, officials like El Centro city manager Ruben Duran say the jobless numbers don’t tell the full story.

Duran points to the fact that back in March 2006 unemployment in Imperial County fell to 12.2 percent and the number of employed people in this county of around 160,000 totaled 54,057.

But when unemployment hit 30.1 percent – well over double the rate in March 2006 — the number of employed workers slid less than 1 percent, to 53,734. City revenue from taxes is only down about 10 percent this year, Duran said, which also does not tally with the sharp rise in the jobless rate.

“Yes, there has been hardship and suffering here,” Duran said. “But where did all those extra unemployed people come from if the number of people in work has barely fallen?”

Tim Kelley, head of the Imperial Valley Development Corporation – a pubic private partnership set up to diversify the local economy — said some of the rise in the unemployment rate comes from El Centro residents scattered about the country who have lost their jobs because of the recession and have come home to stay with relatives. Or that some of them are Mexican immigrants who have lost their jobs in the United States, have returned home and are claiming unemployment benefits in El Centro because it is a stone’s throw from the border.

“There are people who are working the system and that affects our unemployment figures,” Kelley said.

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Drive around El Centro, a city of some 48,000, and it does not feel like some of America’s long-suffering communities like Flint, Michigan, where collapsing auto sales amid the recession have led to an unemployment rate of 15.8 percent. Whereas Flint is dealing with shuttered businesses and abandoned homes, relatively few stores have closed in El Centro.

Duran said the key to understanding the local economy and El Centro’s high jobless rate lies just across the border in the city of Mexicali, a city of more than 1 million people.

“The border bleeds both ways,” he said. “Many people who live here work in Mexicali. The trouble with the statistics is they stop at the border and don’t take into account the role a major city across the border plays in our economy.”

Photos by Lucy Nicholson

For more Route to Recovery stories from El Centro, click here

For the Route to Recovery live blog, click here

COMMENT

Now it is about 6 months after the report. I am wondering what is the latest status of these towns and whether it is still as bad.

Beginning at El Centro

Nov 2, 2009 19:39 UTC

MEXICO

When planning for a trip across America that would both take in a broad swath of territory and also highlight some of the worst and best spots in the U.S. economy today, El Centro in southern California was a no-brainer.

Not only is El Centro located in one of the states worst affected by the housing crisis and the recession – California faces a major fiscal crisis and was reduced earlier this year to paying its bills with IOUs – but it is in Imperial County, which has the country’s highest unemployment rate.

As of September, the jobless rate in this county down by the Mexican border stood at 30.1 percent. Even taking into account the fact that much of the workforce here is seasonally employed in the agricultural sector, that is an astounding number.

We’re here to find out what else has driven this county’s unemployment rate to such crazy levels and see what impact this has had on the local people. With the Mexican border just a stone’s throw away and illegal immigration such a contentious issue in American national politics, we also want to swing by the local state border patrol and get their take on falling immigration numbers.

One question for them and for the locals on our travels hereabouts: has “El Norte” lost any of its appeal amid the downturn?

COMMENT

At least you can get good huevos rancheros and chile rellanos in El Centro while you see Cher’s birthplace.
But, Imperial Cty, which is in the Desert therefore dependent on irrigation water drawn from the Colorrado River, has had to “give” much of it’s Colorado water allocation to San Diego Cty, which is on the Pacific. This has forced many farms in the Nation’s “Salad Bowl” to go fallow (stop planting). And, cost factors and explosive golf course growth in the Desert have caused the grape growers and others to “off-shore” their farming operations into Baja California Norte (Mexico). Where they’re getting the water is a guess because We (the US) have stolen Mexico’s Colorado River water allocation ‘fair n’ square’.
What’s in your mouth, America?
I’ll take “illegal immigration”, thank you very much.

Posted by Whittier5 | Report as abusive

Introducing the Route to Recovery

Reuters Staff
Oct 28, 2009 17:13 UTC

A woman wears a "Keep it Made in America" pin as she participates in a labour activists march in Lansing, Michigan June 1, 2009. REUTERS/Mark Blinch

It would be an understatement to say America has had a tough time lately. After many heady boom years, the bursting of America’s housing bubble led to the near meltdown of the global financial system and the longest, deepest recession since the 1930s.

The downturn some have called the Great Recession began in December 2007 and may already be ending. But U.S. unemployment stands at nearly 10 percent, and much of the economy’s growth has been fueled by government spending in programs like Cash for Clunkers and the first-time home buyer’s credit.

The trillion-dollar question for America is whether the growth of the past quarter is sustainable. Reuters will be attempting to find out this month, in a cross-country trip through the epicenters of the recession and the recovery. Reporter Nick Carey, photographers Brian Snyder, Lucy Nicholson and Carlos Barria, and Reuters TV producer Sharon Reich will be on the road for three weeks starting on Nov 3.

From El Centro, California, with the highest unemployment rate in the country, to Austin, Texas, which has been hit comparatively lightly by the recession, the team will seek out answers at the ground level.

  • How have ordinary Americans fared through this long downturn and what are their hopes and fears as the grim year of 2009 drags slowly toward its close?
  • How are everyday people faring in Bentonville, Arkansas, home of the behemoth retailer Wal-Mart, which has thrived as Americans look to cut household spending?
  • What happened to the dreams of retirees who bought homes during the boom in Bullhead City, Arizona?
  • Do shrimp fishermen in Alabama have anything in common with out-of-work bankers in Charlotte, North Carolina?

You can follow the team’s travels on our Route to Recovery page, with an interactive map featuring news, pictures and video from the towns they visit.

Nick, Brian, Lucy, Carlos and Sharon will also be filing updates from Twitter. You can send us your own questions and comments using the Twitter hashtag #routetorecovery, or by clicking “Add a Comment” in the live blog window.

Do you live in one of the towns we’re visiting? We want to hear from you.

COMMENT

Commercial realestate has crashed in arizona my house was in an excellent location.Not now.You cant even give away downtown prime central phoenix realestate.The vultures are everywhere wanting something for nothing.The government should have let the too big to fail banks fail.Im losing my home and they have no real help.I didnt even pay much for my home but will lose it.I got a home loan modification which is reported negatively on my credit.But no help on horizon to consolidate my loans to survive.ITS EITHER GONNA SELL OR ITS GOING TO THE AUCTION SO BOTH BANKS CAN SHARE IN MY JOY!

Posted by Mikey | Report as abusive
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