Reality Check: Indiana job numbers don't add up - 13 WTHR Indianapolis

Reality Check: Indiana job numbers don't add up

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The state claims this empty corn field in LaGrange County is home to 107 new jobs. The state claims this empty corn field in LaGrange County is home to 107 new jobs.
Gov. Daniels and business leaders break ground for 1400 new jobs in Tipton County that never came. Gov. Daniels and business leaders break ground for 1400 new jobs in Tipton County that never came.
Morton Marcus says Indiana job numbers are not based on reality. Morton Marcus says Indiana job numbers are not based on reality.
Mitch Roob says he cannot release details to back up the state's job numbers. Mitch Roob says he cannot release details to back up the state's job numbers.
This factory in Columbus was supposed to add 125 workers. Instead it laid off about 400. This factory in Columbus was supposed to add 125 workers. Instead it laid off about 400.

State leaders boast of 100,000 new Indiana jobs in the past five years, but an Eyewitness News investigation finds many of the state's "economic successes" are actually empty fields and deserted factories where thousands of promised jobs never showed up.

When Mitch Daniels promised Hoosiers more jobs during a heated 2004 election, some voters were understandably skeptical.

After all, when's the last time you heard a candidate for public office – let alone the state's top office – say jobs were not a priority?

But as a newly-elected governor, Daniels quickly showed he meant business.

In February 2005 -- just one month into his administration – Gov. Daniels created the Indiana Economic Development Corporation to attract new business and more jobs to Indiana.

It got immediate results.

Honda, Nestle, WellPoint, and Toyota announced plans to bring the state new factories and thousands of new jobs, and many other companies followed.

IEDC began tallying all the job announcements, and the agency developed an impressive list.

That list, published each year in IEDC's annual reports, is simply titled "Indiana Economic Successes." It includes the name of each company that committed new Indiana jobs through relocation or expansion, and it shows the specific number of jobs promised.

Since its creation, IEDC boasts more than 100,000 new jobs on its success list, and when the agency and the governor talk about job numbers, the "Indiana Economic Successes" list is what they are talking about.

But 13 Investigates discovered many of the state's "economic successes" aren't really successes at all.

They are empty fields and deserted factories where the state claims there are supposed to be thousands of jobs.

Redefining Success

In Lake County, a vacant lot sits where IEDC claimed Plasmatronics would bring 221 new jobs. The company canceled its project to build a $2.3 million facility in Crown Point less than a year after the governor attended Plasmatronics' celebratory announcement.

In Perry County, you'll find a quiet boat ramp where the state announced Tell City Marine would create 243 jobs. All of those jobs sunk when company investors decided to take their plans across the Ohio River to Kentucky.

In Tipton County, a massive factory is empty and padlocked despite the state's claims of 1400 new jobs. Getrag Transmission Manufacturing declared bankruptcy before it could hire a single Hoosier to assemble dual clutch transmissions.

All of the companies, along with their job aspirations that never materialized, are included on IEDC's "Indiana Economic Successes" list.

From Angola and Evansville to Jeffersonville and Gary, 13 Investigates discovered similar scenarios in every corner of the state. In big cities like Indianapolis and in small towns like Cayuga, WTHR found economic success stories that fell far short of expectations or simply didn't come true at all. In fact, as many as 40% of statewide jobs listed as so-called economic successes have not happened -- and most of them never will -- according to an analysis by Eyewitness News.

Jobs Lost, Not Gained

Gary Kirk has felt the impact.

Kirk and hundreds of other tool and dye makers in Bartholomew County lost their jobs last year at Columbus Components -- just a few months after IEDC listed it as an economic success. The state announced Columbus Components planned to hire 125 new workers. Instead, the factory laid off almost 400, and many of those workers, like Kirk, had more than 30 years of experience with the company.

"For a lot of people, they worked there all their life, then there was no more job there, so I don't know how they can consider that a success story," Kirk said.

Other companies in Bartholomew County failed to deliver on their job projections, too.

PMG, EMCON, LHP and Cummins all planned expansion projects that, combined, would have added another 1,000 new jobs in and around Columbus. The state counts those expansions in its job totals, but local officials admit none of the jobs materialized.

"Those projects got put on hold and, in some cases, wholly canceled," said Corey Carr, executive director of the Columbus Economic Development Board. "It's a success in the sense that those companies chose Columbus instead of somewhere else for their projects … but there's clearly no moral victory for those people [out of work]. We still have the highest unemployment rate we've had in years."

Like Columbus Components, several of the companies laid off workers instead of hiring. WTHR discovered the same "Indiana Economic Successes" that were supposed to add 1500 jobs in Bartholomew County actually laid off more than 2,000 workers.

Success? Who Said Success?

"Not every deal we announce is going to work out exactly as we plan it to work out. That's just the reality," explained Mitch Roob, who is Indiana's Secretary of Commerce and IEDC director. "We are very proud of our record here in the state of Indiana in terms of helping companies to create jobs."

WTHR first asked Roob about IEDC's statistics and "Indiana Economic Successes" list in November.

"I don't know that we call it ‘success' … what we call it is a ‘job commitment,'" he explained.

After showing Roob that his own agency's annual reports list each job announcement as an "Indiana Economic Success," he admitted the term may be too strong. He suggested they should instead be considered "the first step toward the path of successes."

Of course, promoting "Indiana Economic First Step Toward the Path of Successes" doesn't sound quite as good.

In fact, that doesn't sound like a job at all.

"The difficulty we have is that we're dealing with a political agency that wants to look good and wants to make the governor look good and that is standard operating procedure," said Morton Marcus, a business professor and former director of the Indiana Business Research Center at Indiana University. "This is spectacle, not reality."

Hopes vs. Reality

Marcus said he is suspicious of the state's job numbers because they do not reflect actual jobs, but rather job commitments which, as Roob explained, are a first step toward a job.

"A commitment is not a reality. A commitment is a statement of hope and aspiration. We need to be founded in reality and that's the issue," Marcus said. "How many jobs are actually being created? Where are the jobs? Where is the reality as opposed to the hopes?"

The reality is many of the jobs announced in recent years have come to Indiana, and companies such as Nestle, AIT Laboratories, Shoe Carnival, Novae and ConAgra Foods have actually hired more workers than originally forecast.

But there's another reality state officials do not talk about: thousands of jobs reported by IEDC fell through shortly after they were announced and thousands of others will likely never come to fruition.

For many companies, a brutal economy caused by turmoil in the housing, automotive and banking industries is to blame.

"It's been an extraordinarily difficult time because companies haven't been able to borrow the money they very often need to have these factories and jobs become a reality," said Marcus. "It's not surprising a lot of these jobs did not work out."

But 13 Investigates has learned some failed projects, like a $12 million medical waste incinerator project for Madison County, were in serious trouble even before IEDC published them as successes. That project lacked needed support from local residents and political leaders. Anderson Mayor Kris Ockomon declared the project dead weeks before IEDC released its 2008 annual report that listed the PEAT incinerator and its 40 proposed jobs as an economic success.

Inflating the Numbers

Other businesses say IEDC exaggerated their job numbers, reporting best case scenarios instead of more realistic job projections.

According to IEDC's 2008 annual report, Navistar's Workhorse Custom Chassis committed to add 499 new jobs and $127 million in capital investment at its factory in Randolph County. But 13 Investigates found a letter in IEDC's own files showing the company would commit to far fewer jobs than those later promoted by the state.

In the October 2008 letter sent to IEDC project manager Mindy Kenworthy, Workhorse Custom Chassis' general manager Leon Wolmarans wrote "As stated in previous discussions, Navistar can currently only commit to Phase 1 of this project" which "will require circa $15M investment and create circa 100 new jobs."

Four months later, IEDC published much higher numbers for the company in its annual report, which included a second expansion phase for which the company was not ready to commit.

"In our minds, what we were comfortable with was phase one," Wolmarans told Eyewitness News. "Anything more than that was in a feasibility study, so I don't know who at the state leaked that, but it shouldn't have been listed as a success."

Workhorse Custom Chassis has not added any of the 100 new jobs it hoped to create, and Wolmarans said he does not expect any of the expansion projects to move forward.

The Price Tag

IEDC and the governor's office say unfulfilled job commitments cost the state nothing.

While IEDC offers millions of dollars annually in tax incentives and job training grants, those incentives are conditionally-based upon performance.

"If a company commits to create 100 jobs and it only creates 80, it gets 80% of its incentives," explained Roob. "We audit every company before we give out a dime of taxpayer money."

But local communities are often hit hard when anticipated jobs don't show up.

Across the state, cities and counties have lost out on property tax revenue when companies that had been granted tax abatements closed before they expanded their businesses and hired promised workers.

Other communities lost their gamble of offering loans in exchange for business prospects and new jobs. The failed Plasmatronics deal cost Crown Point more than 221 lost jobs. Following a long legal battle, it also cost the community's development corporation more than $250,000 in loans it will never recoup.

And towns like Hamlet have spent big money to build infrastructure for companies that have yet to follow through on their job commitments.

In 2006, Sysco said it would build a $80 million distribution warehouse in Hamlet that would bring 566 jobs to Starke County. Four years later, the town and county have spent hundreds of thousands of dollars to build a new water tower, field well, water treatment facility, roadway improvements and other infrastructure projects to prepare for the new business.

But Sysco hasn't hired anybody and has not yet started building the warehouse. A company spokesman told WTHR the project is now on hold pending an improved economy and Sysco will need at least two more years before it will hire any workers for the proposed Hamlet warehouse.

But state officials don't talk about that. Instead, they focus on IEDC's impressive list of job commitments.

Promoting Jobs That Don't Exist

Indiana State Government Performance Reports issued by the governor's office repeatedly refer to job commitments as if they were actual jobs:

--"IEDC closed 70 competitive deals in the first half of 2007 – creating 9,194 good-paying jobs for Hoosiers" (Sept. 2007)

--"These companies will create over 22,600 new jobs in the Hoosier state over the next several years." (April 2008)

--"These projects will result in the creation of 8,595 new Hoosier jobs." (Aug. 2008)

The governor's own biography states that IEDC "broke all previous records for new jobs in the state." It does not mention the new jobs referenced are actually commitments and that many of them fizzled out years ago.

And a 2008 TV re-election ad for Governor Daniels boldly announced "Record Breaking Job Creation," individually listing the names of 18 companies along with the total number of "jobs" (not job commitments) each company would bring to Indiana. Several large projects included in the campaign ad have yet to result in a single Hoosier job:

-- Getrag, featured prominently in the governor's TV spot and throughout his re-election campaign, declared bankruptcy three months after the election, dashing hopes for 1400 new jobs in Tipton County.

--Despite appearing in the governor's ad almost 18 months ago, Sysco says its greatly-delayed project to add 566 jobs in Hamlet is on hold.

--American Commercial Lines did not create the 1157 jobs promoted in the governor's campaign ad, according to ACL's Kim Durbin. The Jeffersonville company now has about 300 fewer workers than it did in 2006 when IEDC first publicized the company's expansion plans.

--Advance Auto Parts has not yet added any of the 600 jobs showcased in the governor's commercial, and a company spokeswoman says she expects the actual job number to drop to the 400-500 range if the company does open its planned Remington facility sometime in 2011.

Governor Won't Talk

Gov. Daniels declined multiple requests to discuss state jobs statistics for WTHR's investigation.

Jane Jankowski, the governor's spokeswoman, said the governor instead directed IEDC director Mitch Roob to conduct a second interview with 13 Investigates.

Last week, at WTHR's request, Roob provided IEDC's first-ever "adjusted job commitment" numbers. The IEDC report shows 13% of the agency's previously-published job commitments will not result in any jobs. (WTHR's analysis shows the actual number of unrealized job commitments is much higher.) Roob said his agency's realization numbers may not reflect all broken job commitments because IEDC does not seek performance information on all companies it lists as successes.

"Unless you're receiving a state tax dollar [IEDC incentives], we have no business being in your business," Roob said. "We have no way of tracking whether or not you have or have not created that number of jobs."

13 Investigates asked Roob to provide more detailed information for the companies that are receiving state tax incentives and training grants to show which companies had fulfilled their job commitments.

He declined.

"Most of what IEDC has is sheltered from public disclosure for competitive reasons," Roob explained. "That is a competitive weapon that companies believe can be used against them by their competitors… the confidentiality we promise to companies that do business in Indiana is very important to us."

Marcus believes IEDC withholds more than it should, and he says the lack of transparency is both disappointing and concerning.

"They're not afraid to put company names with dreams but we can't have company names with reality," he said. "It's not sufficient at all for the people of Indiana to be given a list of promises without being given also a list of realizations. The state is not being forthright in providing information and there is no public record … it's a very serious matter."

While IEDC did include revised job commitment numbers in its most recent annual report (released last month), the agency again listed all job commitments under the heading "Indiana Economic Successes." There is no mention of those commitments being "first step toward the path of successes."

Behind WTHR's Numbers

WTHR's analysis began with IEDC's 2006, 2007 and 2008 annual reports. Those reports include 495 companies listed as "Indiana Economic Successes" that committed to bring a combined 63,281 new jobs to Indiana.

IEDC compliance reports obtained by WTHR do not specify how many workers – if any – have been hired by each company, so 13 Investigates contacted county economic development offices to gather that information.

A few of the county offices provided additional details, but most told WTHR they do not maintain actual job numbers or would not share it, citing confidentiality agreements or other concerns.

"We really don't have time to track that down, and my director doesn't want me to share that with you anyway," said Marla Schneider, chief information officer at the Fort Wayne-Allen County Economic Development Alliance.

13 Investigates then attempted to contact each of the individual companies listed in IEDC's annual reports. About half of them either did not respond to repeated phone messages or declined to talk about their job numbers. Several company representatives quickly hung up the phone when WTHR producers identified themselves and explained the information they were looking for.

Despite the hurdles, 13 Investigates obtained information about 285 of the "Indiana Economic Successes."

Of the 43,495 jobs committed by those companies, approximately 26,000 (60%) have already been filled or are "on track" to happen.

The remaining 17,495 jobs (40%) are either dead or at risk of not happening, according to information provided by company and county officials.

Governor finally responds to questions about Indiana jobs

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