Inflated numbers, secretive contracts surround Indiana jobs - 13 WTHR Indianapolis

Inflated numbers, secretive contracts surround Indiana jobs

Updated:
Unemployed workers meet in Fort Wayne. Unemployed workers meet in Fort Wayne.
Robin Needham's entire family is looking for work. Robin Needham's entire family is looking for work.
George VanKirk filed bankruptcy after losing his job. George VanKirk filed bankruptcy after losing his job.
Bob Segall gets thousands of state job records. Bob Segall gets thousands of state job records.
Economist Morton Marcus doesn't trust Indiana job stats. Economist Morton Marcus doesn't trust Indiana job stats.

WTHR found tens of thousands of promised Indiana jobs never showed up. Now 13 Investigates has discovered more inflated job numbers, secretive contracts and conflicting stories that help explain why tens of thousands of unemployed Hoosiers are skeptical and downright angry.

Bob Segall/13 Investigates

Indianapolis - Robin Needham has been looking for work for 18 months, and she's not alone.

Her husband, mother and father are unemployed after losing their jobs last year at the Dalton Corporation foundry in Kendallville. Robin's sister is out of work, too. To help pay the bills, her teenage son and daughter started months ago applying for jobs at the local Pizza Hut, Dairy Queen, McDonald's and Wal-mart but, so far, no one has hired them, either.

"It's an awful position for a parent to be in: to have to go up against your 17-year-old daughter or 16-year-old son and compete with them for a minimum-wage job," Needham says, wiping tears from her cheeks. "I feel angry and hopeless. I feel like a failure as a parent. You want to be able to provide for your kids … but no one's hiring."

The Needhams are among more than a quarter million Hoosiers now looking for jobs.

Jan Peppler was laid off as part of a "restructuring" at her retail job two months ago.

George Van Kirk, a longtime carpenter, has been looking for steady work for more than two years.

"I filed bankruptcy in order to keep my house," he said. "I'm 61 years old, close to retirement, and I have no job and no healthcare."

Robin, Jan, George and a dozen other unemployed workers met with WTHR last week at the Northeast Indiana Central Labor Council in Fort Wayne. They represent a cross section of Indiana jobs -- factory workers, accountants, electricians and medical technicians – and all voiced frustration with the current job market.

"Where are the jobs?"

With state leaders announcing thousands of new Indiana jobs every month, the unemployed workers wonder where those jobs are.

"I'm sure not seeing it. Where are they?" asked Chris Oncheck, an unemployed electrician.

"Show us the jobs because I don't see them out there," added Jan.

"Where are the jobs at? If they're there, where are they at?" echoed Dave Hirschy, an unemployed millwright who has decided to return to school for more training.

Their questions are the same questions 13 Investigates has been asking for the past year -- ever since WTHR discovered empty cornfields and abandoned factories where the state claims there are supposed to be thousands of new jobs.

The Indiana Economic Development Corporation says, in recent years, it's helped attract more than 115,000 new jobs to Indiana. But when WTHR asks for proof to back up the state's numbers, the agency won't provide it.

"We don't share it with the public. We don't release it to the news media. That's confidential information," IEDC chief executive officer Mitch Roob told WTHR earlier this year.

Contracts that don't exist

In an effort to obtain more information about the economic development deals announced by IEDC, WTHR asked to see contracts the agency signed with businesses it describes as "economic successes" – those companies that, according to IEDC, committed to bring new jobs to Indiana.

While IEDC has yet to provide all of the records requested, the information obtained thus far provides valuable insight into hundreds of reported job commitments. Perhaps most telling is not the thousands of pages WTHR has inspected, but the pages that are missing.

Eyewitness News has discovered IEDC never obtained an incentive contract from many of the companies it reported as economic successes. Some of those companies went bankrupt, drastically reduced the number of new employees originally reported to the media, orchestrated creative hiring practices that resulted in only a small net increase in employment, or simply changed their mind and decided not to bring new jobs to Indiana. But for years, IEDC has continued to count those companies – and their original job commitments -- in the agency's official job numbers.

Examples include:

- IEDC announced in 2008 that PEAT International would create dozens of new jobs in Madison County, but the $12 million medical waste incinerator project was in serious trouble even before the announcement. 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.

- In Perry County, a quiet boat ramp sits where Tell City Marine said it would create 243 jobs. Those jobs sunk when company investors decided to take their plans across the Ohio River to Kentucky.

- Getrag Transmission Manufacturing declared bankruptcy before it could hire a single Hoosier to assemble dual clutch transmissions. IEDC said the Tipton County project would create 1400 new jobs.

- In Fort Wayne, designer handbag manufacturer Vera Bradley announced in 2008 it would create 490 new jobs, and now says the 627 employees hired since the announcement far exceed the original projection. But in order to create those in-house sewing jobs, more than 600 people were laid off from other sewing companies around Fort Wayne.

IEDC promoted the PEAT International, Tell City Marine, Getrag and Vera Bradley deals in its annual reports and added their original hiring projections to state job totals, even though the real number of new jobs created was far less than projected. WTHR has not seen a signed incentive agreement for any of those projects among the documents provided for inspection by IEDC.

Conflicting information

In March, IEDC general counsel Shawn Peterson told Eyewitness News that IEDC did not have contracts with any of those companies.

But agency data files provided to WTHR earlier this month offered a conflicting story. IEDC gave WTHR a list of more than 6,500 incentive contracts it claimed to have with companies that brought jobs to Indiana. Companies like Tell City Marine and Getrag appeared on the list. Asked to explain the discrepancy, Peterson again insisted IEDC did not obtain executed incentive contracts from the companies, and blamed a possible "coding error" for the mix-up.

"IEDC is not certifying the complete accuracy of its over 6,500 entries. To do so, the IEDC would need to pull each file to determine whether a particular incentive agreement was fully executed by all parties … While our staff believes that the list [provided to WTHR] is statistically accurate, it is certainly possible that companies may inadvertently appear on that list."

Peterson also said companies receive no taxpayer funded incentives until agreements are fully executed and their performance verified, and some companies that failed to sign incentive contracts offered by IEDC still opted to fulfill their proposed job commitments.

But 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 the 499 projection – not 100 – 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 expansion plans have since been abandoned.

While some of the companies listed as IEDC "economic successes" have hired more workers than expected, infusing hundreds of millions of dollars into the state's economy, many others have laid off far more workers than they hired.

As many as 40% of jobs announced by the state from 2006-2008 have not come, according to an analysis by Eyewitness News. IEDC and Governor Mitch Daniels say they won't give out specific job numbers for any company that has signed an economic incentive agreement with the state.

"Feel like I'm being lied to"

"People like [Gov.] Daniels want to say we've got all this job growth. What's he scared of putting the proof out there for?" asked Adam Lewandowski, who recently lost his job as a roadside tire technician. "Is he afraid that we might find out the truth?"

Chris Oncheck, who's been trying to find a job as an electrician for more than two years, says he is frustrated with the state's secretive position on jobs, too. "I feel a lot like I'm being lied to," he said.

It's easy to understand why.

As the number of job commitments announced by IEDC grows, Indiana's unemployment rate has not gone down. In fact, the state's 10.1% jobless rate is one of the highest in the region. According to the latest report released by the U.S. Bureau of Labor and Statistics, only Michigan's unemployment rate is higher among Midwestern states.

"Today we have 276,000 fewer people working in Indiana than in 2006," said Morton Marcus, an economic consultant who spent 30 years as director of the Indiana Business Research Center at Indiana University. Marcus says ribbon cuttings by the governor and job announcements by IEDC look good, but often fail to translate into real jobs.

"What we have are press releases and you can't run an economy on press releases, he said. "We need to be founded in reality. That's the issue: how many jobs are actually being created."

State officials won't say – at least not with any specificity. Neighboring states like Illinois and Ohio put all of their job information on their public websites, where the data can be easily accessed at any time. But in Indiana, getting to see state job records can mean waiting a long time.

146 days … and counting

This year alone, WTHR has submitted ten requests under the Indiana Access to Public Records Act. Several of WTHR's requests were denied because the agency said it did not organize its economic development contracts by execution date, and the agency was not willing to provide a report that would show which companies had signed an economic development deal with the state in a particular year.

After WTHR revised its requests, IEDC began allowing access to incentive agreements signed during the past five years. To date, IEDC has released roughly 7,500 pages of contracts – fulfilling approximately 50% of WTHR's request. It has been 146 days since WTHR first asked to see IEDC's incentive agreements. To get the remaining 50%, IEDC says Eyewitness News should expect to wait longer.

"We estimate that we may be in a position to fully and completely satisfy your request in early 2011," Peterson advised WTHR earlier this month. "We cannot proceed in a manner that unreasonably interferes with our agency's regular business, particularly in light of the current economic environment and the IEDC's limited human and fiscal resources."

When IEDC does provide records to 13 Investigates, the agency crosses out job and salary information it doesn't want the public to see. While those same details are made public in many other states, IEDC says it is required to redact the information due to a state law that classifies it as confidential.

To a roomful of unemployed Hoosiers in Fort Wayne, the secrecy adds insult to their injury.

"We're sick and tired of the lies and the crap," Robin Needham said. "None of us want to be in poverty. We want good jobs."

IEDC declined WTHR's request for an interview for this story.

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