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2007: Business year in review

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By Walt Reichert

2007 was not the best of times in Shelby County, but it was not the worst of times either.

While the county lost some jobs to the downturn in the automotive and construction sectors, it gained three new industries with the promise of more than 250 good-paying jobs in the next couple of years.

While construction in the county slowed as the housing market contracted, the local area was spared the precipitous drop some regions of the country have seen.

Investors and 401(K) participants, here as well as elsewhere, were jittery as the stock market rode a roller coaster, especially in the last month of '07. But when the smoke cleared, most investors made solid, if not spectacular, gains last year.

Industry

Many of the county's 60-plus industries are tied to the automotive sector. In 2007 that was not a good thing.

When figures are released, car sales were expected to be off in December, as much as 4 percent below the previous month. In 2007, the nation's dealers sold 16.1 million cars, the lowest number since 1998. The auto industry generates 12 percent to 14 percent of the nation's manufacturing capacity. Auto industry analysts do not expect a rebound until 2009.

Locally, several manufacturers, including Johnson Controls and Martinrea, continued workforce cutbacks in 2007.

At the same time, however, the county attracted three new industries.

Dayton, Ohio-based Neff Packaging consolidated its three plants and opened in Simpsonville in early spring of 2007. The company moved into a 120,000-square-foot building previously occupied by Cardinal Health in the Kingbrook Commerce Center.

Neff turns raw cardboard stock into packaging of various sizes and shapes for customers. Clients include manufacturers of wines and spirits, cigars, pharmaceuticals and health and beauty products. The company expects about 100 workers to be employed.

The Kingbrook Commerce Center will also be the new home of a E-On.US data and transmission center. E-On had to move out of downtown Louisville to make way for the city's new basketball arena. The company has started construction on a building that will house 40-50 workers. Construction is scheduled to be completed in August of this year.

The biggest fish landed in '07 was the Japanese auto parts manufacturer, Nifco.

Nifco announced plans to build an 85,000-square-foot facility in the Hi Point Industrial Park in March. Nifco makes auto fasteners for Toyota, Honda and American-made models. The company will employ about 150 workers by 2009 who will make an average salary of about $20 per hour.

Housing

The other big player in the national, as well as local, economy is housing. That sector was hammered by fallout from record high foreclosures and tightening credit. The result was a slowdown in construction and home sales.

Nationally, new home sales dropped 9 percent in November, though sales of existing homes made a slight gain. Sales were down 20 percent from November 2006. Home prices are also down nationally. The median price of a home sold in November was $210,000, a 3.3 percent drop from November '06.

Much of the drop in sales and prices nationally have come in those regions of the country - the northeast and west coast - that have seen skyrocketing home prices for the last several years.

Though sales and prices are down, the county has largely escaped much of the national turmoil in the housing market, said Pam Tournaud, president of the Shelbyville Board of Realtors.

"The national average is irrelevant to Shelby County," Tournaud said.

According to board figures, the average sale price of a home in the county in 2005 was $191,500. In 2007, the average sale price was just over $199,000. But prices have slipped in the last six months, she said, and the county's inventory of houses for sale is up versus two years ago. At the end of 2005, 354 unsold properties were on the market. This year ends with 520 on the market.

According to figures compiled by Triple S Planning and Zoning, permits issued for family units - which covers everything from apartment units to single-family and patio homes - numbered 289 in 2007. That is down about 28 percent from 2006. The peak year for family unit permits issued in the county was 2004, with 657 permits.

Tournaud said the drop in sales and prices presents a challenge for sellers but an opportunity for buyers.

"The challenge to our sellers is to price houses competitively," Tournaud said. "And they have to be in show condition when they are put on the market."

But the good news for buyers, she said, is the chance to take advantage of low interest rates and competitive pricing.

"The market presents buyers with a great window of opportunity to take advantage of very low interest rates and if buyers keep waiting they will miss that window," Tournaud said. "We're looking at 2008 optimistically, with a return to a healthy market."

Investments

While the stock market has gyrated all over the board, local investors have remained calm and stayed put with their portfolios, said Gordon Griffin, with Edward Jones Investments.

"There's some Chicken Little stuff going on and much of the national stuff is blown out of proportion by the media," Griffin said. "But the sky isn't falling and most of our investors had a good year."

The Dow Jones Industrial Average managed a 6.4 percent gain for the year, but Griffin pointed out that many mutual fund holders managed gains of 10 percent or better. Griffin expects rate cuts expected by the end of this month to improve the housing market next year.

As far as investing for retirement or other long-term needs, staying the course is still the best advice, Griffin said.

"The same rules still apply," Griffin said. "People need to be diversified and consider worldwide investing."