Resolution No. 32-2017 - Amended Industrial Revolving Fund Plan

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EXECUTIVE SUMMARY LookinIZ Back, Moving Forward In 1975, the Economic Development Administration provided financing of $5 million to one of the Midwest's first Employee Stock Option Plans (ESOP), facilitating the acquisition of a local but nationally known firm: South Bend Lathe. South Bend Lathe continued operation for many years, providing hundreds of local citizens' employment opportunities, opportunities that would have been lost to this community absent this action. The repayment of this ESOP loan was directed into a newly created trust, Industrial Revolving Fund of the City of South Bend (IRF), whose purpose was to reinvest its funds in other companies in need of assistance. Companies with solid business plans that found themselves unable to pursue traditional funding opportunities have been assisted by this fund. Current Adiustment Problem From the perspective of the manufacturing economy of the Midwest, the closing of Studebaker brought diversification to our manufacturing community at a faster pace than would have otherwise occurred. As one might expect, the IRF initially focused upon the manufacturing sector, assisting many local firms to move from automotive to other manufactured products. And where a product change was not possible, companies strove to increase the number of customers they served. As larger manufacturers transitioned away from vertically integrated operations, the IRF transitioned to support those opportunities that resulted such as specialty machining, exotic coatings, and other high - value or specialty businesses. There was a growth in third -party distribution and logistics. These structural business changes were needed to remain competitive in today's manufacturing environment. Unfortunately, while efficiencies were achieved, the total number of companies decreased. Even within surviving firms, nearly all efficiency gains produced fewer rather than more jobs. With few exceptions, the balance of our economy has not countered to offset these losses. Far too much of our regional economy continues to be tied to producing a restricted set of durable goods; a legacy set of manufactured products that have been in a steady state of decline... some for decades. Our regional economy has not successfully moved into new business and products. As detailed in Part I -A (Economic Adjustment Overview) the impact of our community's continued close ties to a declining set of products has produced: Declining wages, employment and population Shift from well -paid manufacturing jobs to lower paying jobs in the service and retail sectors, Stagnant growth in the property tax base Loss of community services and overloading remaining services Erosion of neighborhoods highlighted by an increase in vacant homes Loss of skilled workers as many relocate to higher paying wage areas.