Fort Wayne Mayor Tom Henry’s 2015 reelection campaign ran on an optimistic theme of generating more momentum for the city.

As he touted plans and projects as drivers for near-term and long-term growth, new federal data cast a stark light on economic issues that have dogged local momentum.

Industrial output growth has slowed to a crawl in the Fort Wayne area. Symptoms include tepid new investments by employers and difficulty finding skilled workers for jobs.

“Fort Wayne is not growing near as fast as it was coming out of the recession,” said Kurt Rankin, a regional economist with PNC Bank. “While jobs continue to be added to the economy on the whole, and there are some gains to be had from that, what’s keeping growth from strengthening is businesses trying to preserve profit margins.”

The real gross domestic product in the Fort Wayne metropolitan statistical area, which includes Wells and Whitley counties, grew by 0.4 percent to $18.6 billion in 2014 based on the dollar’s 2009 value, advance statistics by the Bureau of Economic Analysis show. When adjusted for inflation, the GDP – the measure of goods produced and services provided – is $20 billion in current dollars.

While the area is still growing, real GDP for U.S. metropolitan areas, collectively, rose 2.3 percent in 2014 and 1.9 percent in 2013.

Among the industries in the Fort Wayne metro area, construction shrank by 0.14 percent in 2014 from 2013, the information sector fell by 0.19 percent, and transportation and utilities decreased by 0.08 percent, according to the data.

The finance, insurance and real estate industry rose by 0.05 percent, while the arts, entertainment, recreation, accommodation and food services sector had no change. Bright spots include a more than quarter-percent growth in wholesale and retail trade, a 0.16-percent rise in professional and business services, and a 0.38-percent increase in health care and educational services, showing industrial diversity.

Nondurable-goods manufacturing grew by 0.11 percent and durable-goods manufacturing went up by 0.14 percent, which while up, isn’t exactly booming relative to the rest of the nation.

“That’s a big deal because manufacturing accounts for the largest share of our GDP,” said Ellen Cutter, director of the Community Research Institute at Indiana University-Purdue University Fort Wayne.

Recovery pangs

Fort Wayne MSA’s manufacturing industry has grown steadily since the Great Recession, when employment lost nearly 9,000 jobs by mid-2009, and output dropped by 14.5 percent that year, data from the BEA and the Bureau of Labor Statistics shows.

Within a year, the sector rebounded, making double-digit gains in employment and production output by mid-2010. More than 35,000 workers are now employed in manufacturing, preliminary data from August shows.

But, while manufacturing employment is climbing toward pre-recession levels, the rate has slowed over the past few years. The average number of new jobs in the industry grew by about 1.5 percent from 2013 to 2014. The Fort Wayne area also trails most of the country in GDP change, ranking at 250 out of 381 metro areas.

Reluctance is partly to blame.

“We may be caught in a vicious cycle of businesses being too conservative,” Rankin said.

Many employers aren’t taking risks on new investments or expansions, he added.

Skills a must

The hesitation stems from the area’s sluggish population growth and workers without skills employers want, a barrier to business growth.

“The region’s problem isn’t a lack of will to produce; it’s a shortage of workers,” said Rick Farrant, spokesman for Northeast Indiana Works. “With baby boomers leaving the workforce and not enough population capacity to replace them, there are many employers who are having a difficult time finding workers with the right skills, and frankly workers, period, to fill their ranks.”

Northeast Indiana, as part of the state’s Regional Cities Initiative, unveiled plans this year to invest more than $1 billion in projects aimed at attracting new residents to the region and reverse stagnation. The goal is to boost growth by about 2 percent and bring the region’s population to 1 million residents by 2031.

Training and education initiatives are also underway to provide workers with more skills.

Meanwhile, underemployment, where wages aren’t keeping up with employment, is another problem, according to Farrant.

While the Fort Wayne MSA’s unemployment rate has fallen significantly since 2009 – down to 4.1 percent in August – hourly wages as of May 2014 averaged $19.57 per hour, which is under the national average of $22.71 per hour, BLS statistics show.

And while the labor force, at nearly 208,000, has grown about 2 percent since 2012, the figure is roughly where it was 20 years ago.

Workers aren’t finding incentives to reenter the labor force or the ability to spend a lot on goods and services, a driver of economic activity, according to Rankin.

“Without workers reaping the benefits of businesses expanding … you’re not going to see growth momentum,” said Rankin. “It’s not going to be anything that can be built upon to suggest momentum.”

He indicated the decline in construction output and the flat rate in entertainment and hospitality as part of the area’s GDP last year are signs worker’s aren’t spending.

The Fort Wayne area’s economy should maintain sustainable economic growth next year, according to PNC’s third-quarter market outlook. The unemployment rate is expected to remain low amid thanks to ongoing job creation, and wage growth should stay just ahead of consumer price inflation.

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