Steel industry layoffs continue
Contraction of the steel industry began in 2008, but some of the pain continued into 2009 in terms of layoffs and lower operating levels.
At U.S. steel mills, capacity utilization for raw steel production was below 40 percent in early January and only crept up to a 60 percent-plus rate in the fourth quarter, according to the Washington-based American Iron and Steel Institute. Utilization is still below last year’s peak near 90 percent.
Idling blast furnaces, falling steel prices, decreased product demand and lower inventories at steel service centers led to periodic layoffs at ArcelorMittal, U.S. Steel, Beta Steel and other facilities tied to the steel industry. Profit levels for these companies tumbled for parts of 2009 compared to peak earning levels a year earlier.
The Indiana and Chicago region — the nation’s largest second-largest steel producing region — received a limited amount of insulation from the downturn later in the year because of work being transferred from manufacturing operations in other parts of the country.
Recession pain dogs national, local economy
Recession was probably the buzz word of 2009, because workers, public officials and business leaders encountered the effects of it all year.
The National Bureau of Economic Research said the recession began in December 2007, but the second full year of the recession proved just as tumultuous.
Declines in the manufacturing, real estate and retail sectors all took a toll on business earnings, and unemployment remained a drag on the economy all year.
Indiana’s seasonally adjusted unemployment rate peaked at 10.7 percent in June, but it stayed in the mid- to high 9 percent range for most of the year. The Illinois Department of Employment Security said October’s unemployment rate of 11 percent was a 25-year high.
But investors’ confidence in economic indicators helped boost the performance of the stock market. The Dow Jones Industrial Average, which reached a low of 6,500 in the first quarter of the year, likely will close out the year higher than 10,000.
Economists and public officials have said the American Recovery and Reinvestment Act, low interest rates, extensions of unemployment benefits, and tax cuts were aimed at curbing the economic pain households and businesses around the country were feeling.
Business groups, environmentalists debate climate change rules
While landmark federal climate change legislation didn’t clear all hurdles as expected in 2009, positions of federal officials and certain businesses were clearly marked.
Waxman-Markey and Kerry-Boxer were two versions of climate-change legislation that were debated this year, and businesses such as NIPSCO railed against them both. NIPSCO, which generates most of its power from coal-fired power plants, said costs for customers would escalate dramatically because of the requirements. Organizations lobbying on behalf of the steel industry wanted to make sure climate-change reform wouldn’t shortchange American industries and make them less competitive in the global marketplace. Many businesses in the clean energy sector voiced their support for reform and creating a requirement setting a target date for a certain percentage of energy to be generate power from wind or the sun.
Copenhagen was the site of the much-anticipated United Nations climate-change conference in December. The conference generated a nonbinding agreement of world leaders pledging to create a framework to respond to climate-change issues. During that time, the U.S. Environmental Protection Agency made a finding that greenhouse gases endanger public health, which could pave the way for the agency to make more stringent regulations separate from Congress of power plants, steel and other emitters.
EPA raises concerns on BP air permit, expansion continues
Concerns by environmental groups held the attention of the U.S. Environmental Protection Agency, and they objected to the operating permit granted to the BP Whiting Refinery for a $3.8 billion upgrade. With the objection made in October, the Indiana Department of Environmental Management had 90 days to reconsider the air emissions permit it granted to the company.
According to the EPA, the BP refinery didn’t account for the pollution sources caused by towers that burn excess gases on the application for the permit; BP claimed there would be no increase in pollution with the expansion. A spokesman for BP said the company was surprised by the decision, because the EPA reviewed the permit previously and did not object.
Construction for the refinery upgrade began in May 2008, and the project is on track to finish in 2012. The upgrades will allow the refinery to process more heavy crude oil extracted from Canada. The objection has not stopped the project.
Auto bankruptcies affect local dealerships
Struggling automakers Chrysler and General Motors filed for Chapter 11 bankruptcy protection April 30 and June 1, respectively, to reorganize debts and emerge as leaner companies.
Both companies were infused with billions of government dollars and are now partially owned by the U.S. government or the United Auto Workers. The moves were met with resistance among municipal officials, lawmakers and residents especially as both companies chose to terminate sale and service agreements at dealerships nationwide including in Merrillville, Lansing and Hobart.
Indiana Treasurer Richard Mourdock filed the sole objection among creditors to the Chrysler bankruptcy, but the company’s plan ultimately gained court approval. The fight, however, went as far as the U.S. Supreme Court.
Unemployment rates in Elkhart, Anderson and Kokomo often were leaders in the state because of their strong economic ties to the auto industry.
Rebate program grants temporary relief to auto sector
Relief was granted to the automobile sector through the much-anticipated, government-funded Cash for Clunkers program.
Cash for Clunkers used nearly $3 billion in taxpayer funds to provide rebates of $3,500 or $4,500 toward the purchase of a new vehicle if an older, less fuel-efficient model is turned in.
Consumers bought at least 690,000 vehicles through the summer program. Indiana dealerships requested $65.4 million in rebates, and Illinois dealerships requested $142.4 million in rebates.
Thanks to the boost, inventory capacity was reduced, and manufacturers from all brands were able to produce more vehicles.
Critics of the program said the discount should have applied to pre-owned vehicle purchases, and it created a drag on sales later in the year because people rushed purchases to get the discount. Others were concerned about the cost of the program and driving up government debt figures.
Stimulus funding rains on region
From the Portage Board of Works receiving approval for three contracts with the Indiana Department of Transportation, to Schererville breaking ground on several stimulus-funded projects, areas in the region had their share of improvements on the government’s dime.
Portage received approval for $770,000 in funds to pave Samuelson Road from Portage Avenue to the Indiana Toll Road overpass, Central Avenue from the Willow Creek bridge to Elm Street, and Swanson Road from U.S. 6 to County Road 700 North. It also received some $75,000 for landscaping along U.S. 6 from Willowcreek Road to Countryside Park.
The projects are scheduled to begin in spring 2010.
Most of Schererville’s projects will deal with problems with the wastewater treatment plant, including reducing overflow problems with the sanitary system. These upgrades will make the facility more energy efficient as well.
Indiana schools are also attempting to gain more than $250 million in federal stimulus grants by altering some education rules. Applications for aid through President Barack Obama’s “Race to the Top” plan were available in late November. Indiana schools could be eligible for between $150 million and $250 million, based on government guidelines.
Grants will be distributed in two rounds, spring and fall 2010.
First-time homebuyers tax credit
The homebuyer tax credits passed as part of the Obama stimulus were wildly popular with homebuyers, but the staggering cost to taxpayers has raised concerns over whether such a bailout is worth it.
The National Association of Realtors said the first-time homebuyer tax credit has been a powerful catalyst for the sector. The association estimated 1.2 million homebuyers took advantage of the first-time homebuyer credit through October. The association calculates those sales and spin-off transactions contributed $22 billion in spending to the U.S. economy, with each home sold generating $63,000 in additional economic activity.
Economists also have said the credit have helped stabilize the housing market and curbed a price free fall.
The first-time homebuyers tax credit was extended Nov. 5 and a credit for current homeowners was created.
However, the U.S. Congress’ Joint Committee on taxation estimated the combined price of the extension of benefits and credits already collected by April 2010 to approach $20 billion.
Majestic Star bankruptcy
The owner of Majestic Star Casinos in Gary filed for Chapter 11 bankruptcy protection Nov. 23.
Majestic Star Casino LLC is still operating the two vessels and hotel in Gary and other venues around the country, but it plans to negotiate and reorganize its debt with lenders.
Majestic Star has been in talks with lenders for more than a year after it missed a key interest payment on a loan in October 2008 and subsequent payments earlier this year. On Oct. 30, Majestic Star received a default notice on a $79.4 million loan to speed up payment obligations.
The Indiana legislature’s Gaming Study Committee recommended in December to consolidate Gary’s two Majestic Star casino boats and gaming licenses into a single license at a land-based location in the city, a goal already held by owner Don Barden. The committee attempted to address concerns of Indiana casinos competitiveness with increased options in other states.
CN’s acquisition of the EJ&E Railway takes effect
Approved by the feds just days before the new year, Canadian National officials moved forward with their plans for the rail line in 2009.
Many communities objected to the sale, but one that didn’t was Gary, which received a promise from Canadian National to make Kirk Yard a major hub for breaking up and forming trains, which in turn would create jobs for the city.
Canadian National still has to complete $100 million of track construction before fully utilizing the EJ&E and the Kirk Yard. The plan is supposed to increase train traffic by three times, through Lynwood, Dyer, Schererville, Griffith and Gary.
Canadian National also is in negotiations with the Gary Chicago International Airport.
Plans for expanding the airport are on hold because of tracks blocking the site of the renovations. Airport Director Chris Curry said the airport and CN are trying to lock down a legal agreement, and if the tracks can be moved by early 2010, the expansion could be done by 2012.

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