Welcome to Joblessville, USA

President Obama used the plight of a small town in Indiana to shock the nation into backing his plan for economic revival. Leonard Doyle followed him to Elkhart to see how Middle America is coping

Ed Neufeldt had not missed a day's work in 32 years of assembling motor homes when he was laid off abruptly last September. At first, he thought it was yet another periodic slowdown in an industry which typically coped with slack times by telling workers to stay home for a few weeks.

With a meagre payoff of six weeks for his three decades of service, a few weeks later Mr Neufeldt went out and voted for John McCain and waited for a phone call to return to work. Of course, it never came. These days, Mr Neufeldt passes his time volunteering at the local Faith Mission where a group of former workers from Monaco motor homes are renovating a homeless shelter. "I'm so blessed to be doing something productive with my time," he said.

Elkhart, a city of of nearly 60,000 people in Indiana, is a mixture of elegant buildings and wide boulevards, harking back to prosperous times at the turn of the 20th century when European immigrants flocked for work. Many of the buildings were torn down to make parking lots in the 1970s and the once grand downtown looks like a mouthful of broken teeth today. On the grittier industrial side of town, acres of factory buildings now lie idle, with row upon row of unsold motor homes lined up outside.

When trouble was brewing for the massive economic stimulus plan back in Congress, President Barack Obama embarked on a high-risk strategy to jolt Americans awake. He wanted to warn people of the potential for catastrophe if their congressmen and senators did not get to grips with the deepening economic crisis. To make his case, he flew to Elkhart, with its more than 100-year history of manufacturing and a new-found status as the unemployment capital of America. There, with a little help from Ed Neufeldt who introduced him, Mr Obama laid out the urgency of the task Americans face to avoid economic doom.

It worked. The stimulus legislation passed and Mr Neufeldt became an overnight sensation as the latest spokesman for America's unemployed working class. "I'm not Joe the Plumber," he jokes. "I'm Ed the unemployed." With proprietorial pride, Mr Neufeldt pointed to a gleaming land yacht that used to sell for more than $150,000 (£104,000). "This is one of our top numbers," he said, a catch in his throat as emotions welled up.

Despite the brutality of his sacking, Mr Neufeldt peppers every sentence about his former employer Monaco with "we". Bitterness creeps into his voice only when he talks about the company's owner who lives three time zones away in Oregon.

A church-going man with seven children, Mr Neufeldt voted for John McCain in the last election because of his opposition to abortion. None-theless, he was invited by the White House to introduce Mr Obama from the stage. He had to borrow a suit for his big day, but he came across so well that he is now being feted as a local hero. Radio stations from as far away as Chicago and New York have called to interview him and he can hardly walk down the street without people wishing him well.

But so far there have been no job offers, and on a tour though the town he encounters a depressing litany of signs that declare "No applications being taken" even for $6-an-hour minimum-wage jobs. "Although I voted for McCain, I think Obama is needed to lead us out of these problems," Mr Neufeldt said. "There's just something about the man. He was so down to earth when I met him, he made me feel that we were somehow the same. He's even winning over my wife, another Republican."

"Time Was" is a small private museum in the centre of Elkhart. It is full of curiosities from Elkhart's days as a hub of manufacturing. Its owner is one of Elkhart's biggest boosters, 85-year-old Paul Thomas, who ran a shoe shop on the ground floor before retiring. With a twinkle in his eye, he pulls bottles of Dr Miles' Cactus Compound off a shelf. Containing 23 per cent proof alcohol, it was a popular concoction for heart ailments during Prohibition. The yellowing instructions on the bottle advise two to three teaspoons, several times a day, more if required, 15 minutes after meals.

It was "quack medicine pure and simple," Mr Thomas says, produced by the crate-load during the Great Depression. "But don't laugh," he adds. "The man who invented this stuff also came up with Alka Seltzer, making this a very rich town. At one stage, there were 40 millionaires here, one for every 1,000 people."

The quack medicine manufacturer, one A R Beardsley, noticed in the midst of a 1929 flu epidemic that the employees of the Elkhart Truth newspaper somehow avoided getting sick. He learnt that they had been told to drink a combination of aspirin and bicarbonate of soda every day, and he ordered his chemists to come up with a tablet. When Prohibition ended two years later, sales soared as hangovers returned as a national ailment. Soon Dr Miles' Alka Seltzer was curing afflictions all over the world. But, like everything else that put Elkhart on the map, Alka Seltzer is now made elsewhere. The town was also known as the brass instrument capital of the world, but the forces of globalisation blew those companies away too, and only a few instrument-makers remain.

"There's a history of industry coming and going here," said Mr Thomas. "I admit that we had too many of our eggs in one basket, but we are trying to change that." As a member of the town's chamber of commerce, he has perhaps an overly rosy view of the future of Elkhart. "When they say 15 per cent unemployed, just remember how many of us are in employment," he said. "We will get over it, something new will come along; it always has."

Elkhart's fortunes crashed last summer when petrol prices passed $4 a gallon. It no longer made sense for American working families and retirees to take to the open road in RVs (recreational vehicles) that require a 400hp engine averaging only seven miles to the gallon. Then the credit freeze by banks delivered a sucker punch, making it impossible for the few buyers still dreaming of a vehicle to get a loan. Even with petrol prices sliding to below $1.50 a gallon, one company after another closed.

Statistics from the Recreational Vehicle Industry of America are frightening. In just a year, the number of RVs shipped from factories dropped from 25,000 to 5,000. A few years ago, the industry could boast that nearly eight million US households owned an RV, a figure that seems likely to be a high-water mark for the industry. With hundreds of thousands of manufacturing jobs being lost every month, it is likely to be looked back on as a golden era for American workers, when those making $20 a hour could boost their wages with overtime and even afford a holiday.

Elkhart's more modern claim to fame was that it is the "RV capital of America". Retired couples, or "snowbirds" used to flock here to pick up their vehicles to escape the harsh northern winters and drive south to Arizona or Florida. In Elkhart, they would park their vehicles in the lots where beaux-arts buildings once stood. Since the 1930s, taking to the open road in an RV has been the acme of the American Dream for the middle class. As business boomed, dozens of manufacturers and parts suppliers set up shop in Elkhart, attracted by its entrepreneurial ethos and absence of trade unions. Suddenly, that is all gone and with it the working man's dream of taking to the open road with his wife in their sunset years.

In the past 12 months, practically the entire RV industry has disappeared. The city of Elkhart has become a byword for "creative destruction", capitalism's cruellest phase. From being the poster boy for the American way of life, Elkhart is now known as the unemployment capital of America. The joblessness rate has shot up from 4 per cent to 15.3 per cent in less than a year, which is what brought Mr Obama to town on Air Force One on Monday with his siren warning against complacency.

Mr Obama also wanted to point to a way forward by nudging American manufacturers towards green technologies. The businesses that have done so well in Elkhart down the years have shown little interest in new, sustainable, business models.

At the Faith Mission, Mr Neufeldt and other laid-off workers are building a homeless shelter for families. They down tools for a while to talk about their predicament. As the oldest, Mr Neufeldt feels relatively secure, because his house is already paid for and he is close to retirement age when he is entitled to social security. "But I worry for the others," he said. "They are in their mid-forties and fifties with children, I don't know how they are going to survive."

Several of their RV-building colleagues are already homeless and living at the Faith Mission. Others come by every day just to eat. "We're all in good spirits," said Chris Jordan, 47. "And we know that the church will step in and help anyone in danger of losing their house. But how many can they help if this goes on?"

A former RV salesman, Kent Clark, is weary of handing his CV to potential employers; now he is worried about his unemployment payments running out. The payments are supposed to end after six months but there is talk of an extension. He cannot hide the deep stains of worry under his eyes as he eats lunch at the Mission.

"We find ways to save money," said Buster Coleman, 58. "First you turn down the thermostat on the furnace so that it won't come on even when it's freezing outside and you wear lots of clothes in the house." Another friend, Bob Martz, 47, who has a serious illness, said: "I cancelled the land line, the cable. But I'm worried about my health insurance, I don't know how I'm going to pay it."

It does not take much for the men's cheery demeanour to crack, and they talk like refugees, wondering where the next assault on their dignity is coming from. It is only when they talk of how things were a few years ago that the mood changes. Though none of them could ever afford an expensive RV, they all remember the good times when overtime was plentiful.

"We would go off to Disney World for a week," Mr Neufeldt said. "Or pack up the car and spend $1,000 enjoying ourselves by the lake for a few days." His friend Mr Coleman added: "I would go camping all the time, but now nothing." His power drill went silent and his eyes took on a faraway look.

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