Indiana - President Barack Obama urged the economically battered U.S. heartland on Wednesday to resist hard times and pledged $2.4 billion to help create green jobs and ease the pain of rising unemployment.

Eager to show that his $787 billion stimulus package is working, the U.S. leader traveled to a part of northern Indiana with one of the country's highest unemployment rates to announce $2.4 billion in stimulus grants to spur manufacturing of batteries and components for electric vehicles.

This represents the largest investment in this kind of technology in American history, Obama told a crowd of 200 people at a factory that makes motor homes.

For too long, we failed to invest in this kind of innovative work, even as countries like China and Japan were racing ahead, he said.

Indiana, which backed Obama in the 2008 presidential election, had an unemployment rate of 10.7 percent in June -- well above the national average. In the Wakarusa area, hit hard by a decline in its core recreational vehicle industry, unemployment has at times soared to about 20 percent.

Despite signs of economic recovery, White House officials have been acknowledging that hundreds of thousands more U.S. jobs likely vanished last month. Economists polled by Reuters expect a U.S. employment report on Friday to reflect a loss of 320,000 in July, and the unemployment rate to rise to 9.6 percent, the highest level since 1983.

Obama's Republican critics contend that the Democratic president, in trying to spend the United States out of deep recession, will further damage the economy.

THEY'RE NOT HIRING

What we're starting to see right now is businesses making some modest investments, starting to get back on their feet, but they're not hiring yet, Obama said in an interview with MSNBC after his speech.

We've got to make sure that there's still a safety net for folks in place. When the unemployment numbers come out I think we'll have to evaluate this very carefully, he said.

Obama came to the Monaco Coach factory to announce $2.4 billion in grants as part of his administration's Green economy vision and efforts to announce U.S. energy independence, a program intended to create thousands of jobs.

White House economic and Energy Department officials said 48 projects in 25 states would receive money under a deal that requires grant winners to match the federal investment.

Almost all battery manufacturing for advanced technology vehicles is currently based in Asia.

The Midwest, generally, has taken some of the biggest hits over the last decade, and the question is can we start reinventing ourselves so that we can make things that are exported, and not just be constantly importing, Obama said in the interview.

Obama noted that the Wakarusa area had faced a perfect storm of economic trouble, including an overall downturn in U.S. manufacturing and the problems associated with the troubled auto industry. He said stimulus funds had helped save the factory where he spoke.

Thank you, a person in the audience shouted, as Obama noted the factories were buzzing back to life.
You're welcome, Obama replied, to laughter. Thank the American people.

(Writing by Patricia Zengerle, editing by Matt Spetalnick and Paul Simao)

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