Big questions swirl around big Indiana business projects - 13 WTHR Indianapolis

Where are the jobs? Big questions swirl around big Indiana projects

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Connersville welcomed Carbon Motors' announcement. Connersville welcomed Carbon Motors' announcement.
2012 is now here, but the money Carbon Motors needs to begin production is not. 2012 is now here, but the money Carbon Motors needs to begin production is not.
A Sysco food plant was planned for Hamlet. A Sysco food plant was planned for Hamlet.
INDIANAPOLIS -

Company executives are quiet. State officials are backpedaling. Unemployed Hoosiers are waiting. Three big economic development projects that promised to bring more than 3,000 Indiana jobs remain shrouded in uncertainty months and, in some cases, even years after they were announced. Despite great fanfare and high expectations, 13 Investigates has learned the highly-publicized jobs will not come soon – and might never come at all.

In late October, Indianapolis Mayor Greg Ballard and Indiana Governor Mitch Daniels stood in an empty field in northwest Indianapolis to help announce new jobs for the city.

The president of Litebox revealed plans to turn the field into a bustling factory, where the start-up company wants to build large mobile video screens that will show movies, sporting events and concerts.

"We plan to create at least 900 jobs on this facility here and 200 jobs downtown at 146 East Washington Street," explained Litebox president Bob Yanagihara. "You people will be so proud to have new jobs springing up left and right."

The mayor praised Litebox, the governor called Yanagihara "visionary" and the Indiana Economic Development Corporation quickly issued a press release to formally announce Litebox would create up to 1,100 new Hoosier jobs by 2014.  

Two months later, IEDC released its year-end job totals and there is a glaring omission.

Eyewitness News has discovered Litebox and its 1,100 state-promoted jobs are not included on the state's projected jobs list due to uncertainty about the project.

"Historically, projects that are more speculative or are awaiting federal funding have not been included in IEDC's year-end data," explained agency spokeswoman Katelyn Hancock.

(It is worth pointing out, contrary to IEDC's explanation, many speculative projects are included in state jobs data. A previous WTHR investigation showed questionable economic development projects have appeared in IEDC's annual reports and year-end job totals, even though the projects were declared dead or near collapse well before IEDC published its reports.)

When it comes to Litebox, the governor has expressed caution, too.

In December, he admitted his enthusiastic support of Litebox might have been premature. The governor said his attendance at the October job announcement was a mistake that earned a place on his 2011 "Oops List." That came just weeks after The Indianapolis Star reported Yanagihara had a trail of unpaid debts and angry creditors in California.

126 days and counting…

So where does the Litebox project stand today?

Early this month, Litebox chairman Alexander Cappello told WTHR plans are moving forward. He said a prototype of the company's first mobile video unit is almost ready for commercial operation and "should be done soon."

And while there is no activity at the company's proposed factory site, Cappello said Litebox is making progress on a building it has purchased in downtown Indianapolis.

"Right now we're focusing on fixing up the building and getting it ready to be our new national headquarters," he said.

But 13 Investigates has learned progress on both the headquarters and the prototype are moving slowly.

Litebox's downtown headquarters is a vacant building filled with debris. The contractor hired to renovate the offices at 146 E. Washington Street says Litebox still hasn't given him drawings or plans, and a 180-day work permit to begin construction expired two weeks ago.

Where engineers are assembling Litebox's first prototype in western Minnesota, there is also little activity, according to Gary Stoks, owner of SMI & Hydraulics.

"At the moment, nobody's working on it. We're in a holding mode," Stoks told WTHR this month. "I keep telling [Litebox] we need to get going, but I think they're waiting on supplies."

Stoks said the chassis is complete, but he needs other key parts to move forward.

"They keep saying they have to meet new deadlines, but we're still waiting for the [video] board. We also need the roof design. If they get us the board, after that it could be done in about a month," he explained.

In recent weeks, 13 Investigates has left more than a dozen messages for Yanagihara and Cappello to get more information about Litebox. They have not returned any of WTHR's phone calls.

Four months after the company's highly-publicized jobs announcement, it is still unclear when the company might start hiring.

And in other Indiana communities waiting for jobs, the wait has been much longer.

946 days and counting …

In July 2009, the president of Carbon Motors proclaimed Connersville "the police car capital of the world."  

William Li announced his new auto company would bring 1,550 new jobs to the small city in eastern Indiana, where a vacant factory would become the future assembly plant for his company's high-tech police cars.

An estimated 7,000 cheering, flag-waving, sign-holding Fayette County residents showed up for the announcement following a red-carpet welcome for Carbon Motors. For months, that welcome included bands, cheerleaders, rallies, letter-writing campaigns, community prayer sessions and one-on-one meetings with city and state leaders.

"We need these jobs desperately, and we're going to do whatever it takes to get them," Connersville mayor Leonard Urban said just prior to the announcement.

When the announcement finally came, Connersville was buzzing with excitement – and with good reason.

Li said his company already had a half-billion-dollar backlog of reservations for his E7 police cruiser. The city with Indiana's highest unemployment rate was expecting a big recovery.

"We're going to take this shuttered old plant and turn it into something everyone will be proud of," Li told an enthusiastic crowd. "We'll start production in 2012."

2012 is now here, but the money Carbon Motors needs to begin production is not. As a result, the mood in Connersville is now much different.

Now considered "a long shot"

"Nobody's excited anymore and I personally don't think it's coming," said Connersville resident Andrea Rent.

Robert Duncan is skeptical, too. "Here it is three years later and where are they at?" he asked.

"Sure doesn't seem like it's going anywhere," echoed Tony Burkhart, who moved to Connersville after hearing about Carbon Motors' jobs announcement. He hoped to get a job building police cars, but says that hope is fading.

"I'm out of work now and I've got to drive 50 miles just to find work. There's not much out here," he said.

Leonard Urban is the Mayor of Connersville, and he understands why residents are frustrated.

"We've got the highest unemployment again this month," he pointed out. "We need those jobs so bad."

The mayor says he still supports the Carbon Motors project, but he admits what seemed like a sure thing in 2009 now seems like something else. 

"It's a long shot. For a company in 2012 to develop a completely new vehicle, market it, produce it and sell it, I mean, that's a long shot," said the mayor.

Carbon Motors is now knocking out windows and tearing down metal siding as it renovates the front of its new headquarters in Connersville. But the company is spending $2.5 million in federal and local grant money to pay for the new exterior and roof.

Waiting for millions

And before Carbon Motors will start building inside the plant, the company wants more than $300 million dollars in federal loans. The Department of Energy has been trying to decide whether to approve the loan from its Advanced Technology Vehicles Manufacturing Loan Program for 33 months.  

Morton Marcus, an economist who spent 30 years as director of the Indiana Business Research Center at Indiana University, said DOE's lengthy deliberation might signal trouble.  

"You don't begin to get a red flag until 18 months, but when you're talking almost three years, I think the red flags are up," Marcus said. "It means the people at the Department of Energy are uncertain as to whether or not this is something they want to put their money into."

Earlier this month, a source inside the Energy Department told WTHR some DOE officials have raised concerns about Carbon Motors' ability to repay a government loan. The source, who spoke anonymously because he does not have authority to talk with the media, said the Carbon Motors' loan request is still being considered.

"It's been sent to senior officials within the loan program for review, and they will make a recommendation, probably within the next few weeks," said the source. "It's on their priority list."

Will Carbon Motors move forward with its Connersville plans – and can the company survive – without the loan? The company's spokesman will not answer that question.

"Carbon Motors is a privately help corporation and as a matter of policy does not comment on its financial matters," wrote marketing director Stacy Dean Stephens. "We do remain committed to the City of Connersville, Fayette County and the Great State of Indiana and look forward to putting Americans back to work as soon as possible."

But Mayor Urban did talk candidly about what might happen to the 1,550 jobs promised to Connersville if the Department of Energy denies Carbon Motors' loan request.

"Those jobs could be lost," he said, later repeating the word "could." "I wake up at night thinking about it… if this doesn't happen, we failed at what we tried to do."

They mayor says months of waiting has taken a toll on the morale of the city. During a 35-minute interview with Eyewitness News, the mayor did not hide his frustration, and he made it clear that frustration is not aimed at Carbon Motors.

"These are people who put everything they had on the line to build this car. They have done everything they told us they would do. They have done everything the federal government asked. It's not their fault," the mayor said, quickly turning his comments to the Department of Energy.

"It's not the city's fault that our federal government developed this energy plan with billions of dollars in loan guarantees and now, for some reason, is just sitting on it… They won't tell us anything – yes, no or maybe. Why can't they communicate with us and tell us what's bothering them or where we are or what they think so we can make a plan?"

Plan B

The mayor actually has developed a plan – just in case the Carbon Motors project falls through.

With the proposed police car assembly plant still sitting empty, local economic development leaders are now showing the site to other companies interested in bringing jobs to Fayette County.

"Every week we have companies coming in and looking at that building. We have three companies right now that we have a memorandum of understanding with that want that building," the mayor said.

Even though Carbon Motors now has its name on the front of the factory (and on the street sign leading to the factory), the city of Connersville still owns both the land and the building. The mayor says it's time to use the 1.8 million square feet of vacant space to put people to work.

"Carbon Motors doesn't really want us to do that, but at this point we don't have much choice," Urban said, adding that he'd like to bring additional companies to the city-owned property even if the Carbon Motors project moves forward. "We will put a company in there – or two companies. We will."

Last week, 13 Investigates saw Fayette County economic development director Steve Bell show the Carbon Motors facility to a group of businessmen from Ohio.

"There's a lot of interest," Bell told WTHR before taking the group inside. "We are still working with Carbon Motors but, beyond that, there's another million square feet of space in there."

Urban said a company from China had visited the factory site the week before.

If Carbon Motors were able to line up financing tomorrow, Stephens says it would still take three more years before the company would begin assembling police cars in Connersville. That means – best case scenario – most of the 1550 jobs Connersville is waiting for won't come until 2015.

If you think that's a long wait, just talk to folks up north in Hamlet.

2,193 days and counting…

The quiet town in northern Indiana has been waiting six years (and two days) for a Sysco food redistribution plant that was announced in early 2006.  

The project would bring more than 500 jobs to the town of roughly 800 people.

Judy Waymire, who operates a tavern in the center of Hamlet, says her customers haven't stopped talking Sysco.

"Everybody talks about it every day. Everybody wonders about it every day," said Waymire, wiping off tables before lunchtime. "I don't know what's taking them so long. They still haven't come to town and people still don't have jobs."

While residents in Hamlet haven't forgotten about Sysco, many wonder if Sysco has forgotten about Hamlet.

"We haven't heard nothing and they don't tell us much," said David Fretz. "I don't think they're coming."

Six years after Sysco announced its plans, an empty field on the edge of town that is supposed to become the company's new warehouse is still an empty field – except for a shiny new water tower. The town built that just for Sysco, along with new well fields, water mains and other site improvements totaling more than $3 million – all paid for with local, state and federal money.

While Hamlet now has a new water tower waiting for Sysco, residents say the rest of the town is crumbling. Some of Hamlet's street lights are literally being held together with duct tape.

"We can't even fix our sidewalks. The town spent all the money putting the water system in for Sysco and it was just a pipe dream," said longtime resident Walter Clemens. "We're just left out in the cold. There's no jobs coming."

Greg LeRoy, executive director of Good Jobs First, a Washington DC-based watchdog group that tracks corporate subsidies, says small towns take great risks when trying to land big economic development projects.

"It's not unusual for these projects to get delayed or to fail," LeRoy told WTHR. "When you're chasing a trophy deal and you put a lot of time and resources into landing one big company, you risk your future to the fate of that company. Resources spent attracting that outside business could instead be used to grow their own – to pay attention to the existing employer base and to help the companies that are already there grow and get better at what they do."

The Starke County Economic Development Director says he is still optimistic about Sysco.

"As far as I know, it's a go. They just haven't told us when they're putting the shovels in the ground," said Charles Weaver. "I still expect things to happen this year."

Asked whether the project is, indeed, still moving forward, the response from Sysco gives little reason for optimism.

"In light of the current low growth environment, we are assessing the economics of this investment and the timing of when we might consider breaking ground. When we conclude that assessment, we will then decide our plan of action," Sysco spokesman Charlie Wilson told WTHR this month through e-mail.

Wilson said if work does begin on its Hamlet redistribution center, construction will likely take 12 to 18 months before the facility will be opened.

That means for Hamlet – as well as Connersville, Indianapolis and several other Indiana cities waiting for promised jobs – the clock keeps ticking … with no end in sight.

Footnote

Following WTHR's 2010 "Where are the jobs?" investigation, IEDC began releasing adjusted job numbers to reflect companies that did not follow through on their job announcements. IEDC's adjusted numbers show one in five Indiana job announcements from 2005-2009 fell through, resulting in more than 17,500 jobs that never became a reality for Hoosiers.

The state's adjusted numbers do not reflect dozens of other economic development projects that have underperformed or are in jeopardy of failure, putting at least 20,000 other promised jobs at risk.

The governor has frequently pointed out that most economic development projects are incentive-based, and the state does not lose any money on projects that do not create jobs.

"We never pay a dime until they actually create those jobs," Daniels said following WTHR's 2010 investigation.

However, municipalities and the state often spend local tax dollars and federal grant money on economic development projects long before the companies begin hiring. Indiana towns, the state of Indiana and the federal government have already spent nearly $10 million on infrastructure and facility costs for the Carbon Motors and Sysco projects, which have yet to materialize.

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