Business Focus

Trump’s dream of blue-collar jobs? In Kokomo, success calls for more.

A shift in thought

Indiana enjoys humming auto plants. The city of Kokomo, however, shows how economic success can hinge not just on factories but on a ‘people first’ model of growth.

A moribund one-block stretch of N. Buckeye Street has been transformed into a busy restaurant district in Kokomo, Ind., where even on a weekday parking can be scarce.
Laurent Belsie/The Christian Science Monitor
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Caption

In Kokomo, Ind., soon after Highway 931 bends away from due north, two long, low factories stretch for more than a quarter-mile.

On the right is General Motors, a shell of its former self; on the left, a Fiat-Chrysler transmission plant, going full tilt. With five facilities in the area, Fiat-Chrysler employs twice as many people as it did in the depths of the Great Recession. It churns out more transmissions here than anyone anywhere else in the world.

In some ways, this factory city in America’s most manufacturing-dependent state is living the Donald Trump dream. Jobs are plentiful. Foreign immigration is extremely low. In the presidential election, the county went 2 to 1 for Mr. Trump, better than red-state Indiana as a whole.

But for a conservative region, Kokomo and surrounding Howard County are committing a kind of economic heresy. While the president touts more manufacturing jobs as one of the central pieces of his overall economic plan, the county is diversifying away from them.

The city's mayor, a Democrat, has transformed the downtown to make it a livable, walkable place for professionals. And despite the partisan strife in Washington, local Republicans – at least, many of those who live or work in the city – have come around to back the strategy, which turns traditional economic development on its head.

The “aha” that triggered the change? The realization that jobs often follow people, not the other way around.

“We are the poster child for showing how you can take a community at the bottom and come back and prosper,” says Paul Wyman, a Howard County commissioner and head of his own real estate firm. “To me, that is very conservative. [And] we are doing it all together: government, unions, companies. On the big picture idea, we are together.”

New appeal as a place to live

Kokomo’s changed theory of civic progress is on display just south of downtown. On the site where, 120 years ago, Kokomo built its first horseless carriage, a concrete mixer makes a rumbling turn into a construction entrance. It’s followed by a gravel truck and, a few minutes later, another concrete mixer. Workers are building 306 Riverfront District, a $32 million mixed-use development that is Kokomo’s largest-ever public-private project.

The riverfront motif seems a little over the top. A sky deck will overlook the “Walk of Excellence” (actually a bike trail) and Wildcat Creek (which is less than three feet deep on a good day).

But in comparison with eight years ago, when the idea of building any apartments here, let alone luxury ones, seemed ludicrous, Riverfront represents a breakthrough.

Back then, unemployment topped 20 percent. All four of the city's major employers were in bankruptcy. The future of auto-dependent Kokomo hung in the balance as Congress deliberated a bailout for the floundering Big Three.

Riverfront isn’t just a gamble that those dark days are over. It reflects a confidence that some of the 9,000 people who work but don't live in Howard County want to trade their suburban or rural homes for an urban lifestyle. And it’s the hope of ripple effects for the local economy that go beyond the development itself.

‘There's lots to do’

“You say ‘Kokomo,’ and all you hear about is Chrysler,” says Jake Brown, a financial adviser who in January moved into one of the luxury apartments atop downtown’s new parking garage. “But you come up here and you find there’s lots to do.”

Indeed, the dark days of recession seem almost unimaginable now. New projects include shops, townhomes, and a YMCA. The city core has swapped stoplights and one-way streets for stop signs and narrower, two-way streets – a conscious effort to slow down traffic and be more pedestrian-friendly. A moribund one-block stretch by the old train depot has been transformed into a restaurant district where on a Thursday night nearly all the parking spots are taken and kids play ping pong on outdoor concrete tables.

In what many here see as a pivotal step, the city also razed its worst neighborhood and replaced it with a baseball stadium that hosts high school games and the Prospect League, where collegiate players show their stuff during the summer in the hopes a major league scout will notice.

“By cleaning up the neighborhood and taking your biggest liability in the city and turning it into your best asset, that flip made a difference,” says Mayor Greg Goodnight, who is largely credited with the turnaround. “I've had dozens, more than dozens, of people come up to me and say, ‘Mayor, I opposed the stadium. I was wrong. Thank you.’ ”

Big cities such as Austin and Atlanta adopted the jobs-follow-people strategy years ago. The idea is that instead of trying to jump-start growth by attracting a new factory, a city attracts new residents by making itself a great place to live, says Michael Hicks, an economist at Ball State University in Muncie, Ind. That population influx in turn creates new jobs for teachers, health-care providers, waiters, attorneys, and so on. But “few smaller cities have figured this out, and almost none as well as Kokomo,” he writes in an e-mail.

“Things are hot right now,” says Brandi Rees, a local realtor phoning in on her way to show a home that came on the market less than an hour earlier. “The buyer said he could meet me at 7. I told him I'm afraid it's going to be sold. Let's go right now.” (The buyer dropped everything to see the house and put in an offer above asking price, which was accepted.)

Renewal, but not an easy road ahead

There’s a cautionary element in Kokomo’s revival. The hopping assembly lines at Fiat and the busy cement trucks are a reminder that the ​success story here is rooted not just in the rise of service-sector jobs, but also in the cyclical industries of manufacturing and construction. A heavy reliance on those jobs means extra vulnerability to potential downturns.

And low levels of immigration are one reason why, for all its efforts to attract people, Kokomo’s strategy has been only a partial success.

Three days a week, David Tharp, the deputy mayor, checks his computer for Census and other data. His main obsession: population figures. The city is growing, slowly, but the county is not, overall. The population peaked in 2012 at 82,914 and has since declined by 350 people.

The deputy mayor and others are quick to point out that holding one’s own is good compared with the dire predictions a few years ago. Many Midwestern cities, after all, have been posting population declines.

Making things beyond cars

Due to automation, a factory-driven “people follow jobs” strategy simply stopped working. But Kokomo’s story is also that manufacturing endures as a building block. And it can coexist with the philosophy of downtown redevelopment.

“These two views don't need to compete,” says Charlie Sparks, president of the Greater Kokomo Economic Development Alliance. “We're back. But that's not to say we're satisfied where we are.”

In fact, start-ups that make things are an integral part of Kokomo's diversify​ing economy.

“This is our map,” says Mary Baker, customer service director of AndyMark, which designs and sells parts for educational robots. The map is full of yellow pushpins denoting sales to nearly 70 countries, including China, Nigeria, and Trinidad and Tobago. The company started in the Bakers’ home in 2004, moved to the county’s innovation incubator, then to its own 24,000 square-foot facility, and is now bursting at the seams again.

“Either I am foolish or a purist. I believe that American manufacturing is still alive and well,” says company president Andy Baker (husband to Mary), who left his job at Delphi Electronics in 2007 to work full-time at the robotics firm.

The entrepreneurial spirit runs deep here. Engineer Elwood Haynes built his first horseless carriage two years before Henry Ford built his. The city also claims to have produced the first pneumatic rubber tire, mechanical corn picker, and push-button car radio, made by Delco (now Delphi). More recently, a retired GM engineer developed a business that today sells large music speakers with a vintage sound.

Trump’s resounding win here 

There is some political irony in Kokomo’s recovery. The city would not be where it is today – investing to diversify away from the auto industry – if car manufacturing had not made a comeback first. Thanks to a bailout initiated by President George W. Bush and overseen by President Barack Obama, Fiat-Chrysler has poured a staggering $1.9 billion into upgrading its five plants in the area. All the plants have three shifts going. The casting plant, billed as the world’s largest, operates 24 hours a day.

Yet Howard County voters last year rejected both the Democratic successor to Obama and the Bush wing of the Republican Party to help elect Trump.

One of the enduring mysteries here (to local Democrats, anyway) is why Trump did so well. While he preached how bad things were on the campaign trail, Kokomo was blossoming. While he warned about the dangers of Muslim immigration, Indiana University of Kokomo was hosting a dozen or more Saudi graduate business students.

In fact, Howard county voted for Trump by a larger margin than the counties containing nearby Muncie and Anderson, cities that permanently lost auto jobs and for whom his campaign rhetoric more closely fit the facts. The president's success here may have something to do with voters taking a longer view than just the rebound of the past few years.

“A lot of people believe that trade impacted manufacturing negatively in the Midwest and Kokomo, in particular,” says Jeff Kovaleski, editor of the Kokomo Tribune. “There's a longing for those high-paying manufacturing jobs to return…. And when we hear that we are going to strengthen the military, that's us. It's almost like he was talking to us.”

Union jobs, but with pressure on paychecks

These days, although some factory jobs are high-paying, many others aren’t. A decade ago, struggling Chrysler, GM, and Ford got the United Autoworkers (UAW) union to accept a two-tier wage system where new hires would be paid much less than current workers. So today, while the average wage at Fiat-Chrysler is $29 an hour, more than half its Kokomo workers toil at jobs that start at $17. That’s $8 an hour less than what the United Way estimates a family of four in Howard County would need for a “bare-minimum” household survival budget.

Slowly, pay will improve. The newest Fiat-Chrysler contract allows new hires to catch up with veteran pay over eight years. GM has a similar contract, but has specifically excluded workers at its Components Holdings factories, including the one in Kokomo, because intense foreign competition would make higher pay unsustainable. GM’s Kokomo factory is slated to lose another 160 workers, paring its workforce to around 600 by mid-year.  

“You have people who say: ‘I remember when the parking lots at GM were full.’ Well, that world is gone,” says Mr. Tharp, the deputy mayor. “You can't go back in time and compare.”

Either way Kokomo goes – attracting service jobs or growing new entrepreneurs – the aim is to move beyond auto jobs.

When GM drastically cut pay at its Kokomo plant, Amber and Todd Jordan ended up quitting their jobs and devoting themselves to their fledgling business, Kokomo Toys, that had grown from their hobby of collecting action figures.

“We're making more” than at GM, Ms. Jordan says.

And for her and others, the economic gains are part of a broader revival of civic life. “Honestly, I think [Kokomo] is better than what it was. You come downtown and everything’s beautiful,” she says.

Churches are working together as they never have before, says Morgan Young, pastor at the nondenominational Oakbrook Church, one of the biggest churches in the city. His wife, Sandra, a former school administrator, runs the Main Street Café downtown, which serves everything from hot beverages to tasty watermelon smoothies.

“The history of Kokomo is the history of the automobile. And the history of the automobile is this constant roller coaster,” Pastor Young says. “People have recognized it's great that the auto industry got us here. But it's probably not going to take us to the next level.”