KOKOMO, Ind. — At a time economists fear a recession may be looming, Kokomo and its surrounding region may feel less impact, with plans underway for a $2.5 billion venture for lithium-ion battery production plant in Howard County.
Stellantis and Samsung SDI announced plans to build the plant earlier in 2022, bringing 1,400 jobs to Kokomo. This represents 5 percent growth for the next few years, according to Dmitriy Chulkov, IU Kokomo professor of economics and management information systems.
“This investment is not as likely to depend on interest rates and the Fed, so it’s less likely to be decreased,” said Chulkov, during Tuesday’s annual Kelley School of Business Economic Outlook panel, hosted by the IU Kokomo School of Business.
“This gives us a lot of reason to be more positive for this area,” he said. “We cannot overstate how important it is that innovation continues to be a strength of this area.”
The positivity comes at a time Kelley School economists say the outlook is the most uncertain in half a century, leading them to create both an optimistic and moderately pessimistic forecast for 2023.
The upcoming holiday season may play a role in which forecast comes to pass, according to Phil Powell, academic director of the Indiana Business Research Center.
“Usually, business takes us into recovery, and determines if we have a hard landing or a soft landing,” he said. “Right now, what households do will determine if we have a pessimistic or optimistic forecast. Are households going to pull up and sit on their savings? If holiday sales come in below expectations, brace yourselves for perhaps a tougher winter.”
The Stellantis investment is the right step to Indiana attracting businesses that bring in high-wage jobs, said Carol Rogers, director of the Indiana Business Research Center.
“We need to up our game to tell people about this,” she said. “We’re too modest. We work hard, but we don’t tell people what we’re doing. Indiana needs to become more attractive in terms of attracting people to our state and our communities. We want the students going to our high schools to become part of the productive workforce here, and we want college students to find great opportunities here.”
Howard County Commissioner Paul Wyman said the new facility springboards the Kokomo area into being a leader in EV technologies. Construction of the plant will create 2,000 jobs for construction workers, who will boost the local economy. He anticipates the supply chain for manufacturing the electronic batteries will follow the new plant, creating additional investment and jobs.
“These types of investments are transformational,” he said, noting that as recently as 10 years ago, Howard County was forecast to lose significant population. Instead, the area grew by more than 1,000 people.
“We countered that with massive investments in quality of life and economic development,” Wyman said. “People are choosing to live here because of the investments we’ve made in our community.”
Other highlights of the economic outlook forecast included:
The stock market has lost $10 trillion over the last year. The panel believes most losses are behind us, but there is a reasonable chance losses could continue.
Interest rates will stay high and should get higher because of Federal Reserve actions. Currently, the financial markets expect the Fed to top out somewhere between 5 percent and 5.5 percent by summer 2023.
Durable goods manufacturing, at 16 percent of Indiana’s GDP, will have an outsize reaction to rising interest rates. This will cause reduced product demand among the continued pressures of a tight labor market, increasing supply chain costs coupled with (somewhat diminishing) disruptions, resulting in this sector shedding jobs.