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Try As They Might, The Dead Seldom Rise


Special Report -- After IBM

TRY AS THEY MIGHT, THE DEAD SELDOM RISE

It was the prototypical steel mill, a 400-acre, 3,000-employee testament to American heavy industry. But U.S. Steel Corp. shut down the Homestead Works in 1986. Repeated efforts since to attract new employers to Homestead, Pa., including Sony, Mercedes-Benz, and United Parcel Service, have failed. Today, half of Homestead's households earn no money. Its middle class has fled, and the struggling town of 6,000 along the Monongahela River is overrun with poverty and drug gangs.

It's an all-too-familiar picture:

The American landscape is littered with hardscrabble towns that withered away when the big employer went bust, relocated, or laid off thousands of workers. Gary, Ind.; Brockton, Mass.; Darlington, S.C.--the names might as well be engraved on tombstones.

RUSTY SKILLS. As Homestead has found, a host of obstacles can frustrate recovery. Competition among cities to land large employers is fierce. Too often, old company towns, encumbered by high wages, unionization, and creeping urban decay--not to mention little wherewithal to offer financial inducements--can't win. Just as important, the skills of local workers, coddled by years of job security, may be out of touch with the times. "We are sadly unprepared," says Mary Flagg, Homestead's borough manager.

Flint, Mich., for example, tried luring new business to town when local kingpin General Motors Corp. started shutting plants in the late 1980s and unemployment soared to 22%. Its problem: a dearth of workers trained to do anything but assemble cars. The redevelopment effort stumbled, as did an attempt to diversify by opening a combined museum/theme park called Auto World. And Flint, with its crime and boarded-up shops, isn't exactly a magnet for corporations. Unemployment has dropped--to 12%--only because GM is hiring again.

Lack of infrastructure and regional linkages can kill off development efforts, too. The once-bustling timber town of Klamath Falls, Ore., has had little success bringing in new business to replace 2,500 well-paying jobs lost since 1979, when mill owners such as Weyerhaeuser Co. began closing shop. Its problem: location. Situated about 17 miles from the California border, it isn't near any big cities. It isn't near a big airport. It isn't near anything.

Those towns that do win fresh employers are finding the new jobs don't pay what the old jobs did. Eau Claire, Wis., has struggled mightily to replace 1,500 jobs lost when Uniroyal Chemical Corp. closed its plant in 1992. The town has attracted dozens of small startups and recently landed Hutchinson Technology Inc., a maker of computer disk-drive parts, which plans to open a 156,000-square-foot factory employing 1,400. But few of the new jobs will pay more than $8 an hour, a far cry from the average of $14 an hour at Uniroyal.

The single factor driving successful redevelopment: almost fanatical local leadership. Columbus, Ind., some 60 miles south of Indianapolis, watched 6,600 jobs disappear during the early 1980s when recession and foreign competition hit the town's biggest employers, Cummins Engine Co. and auto-parts maker Arvin Industries Inc. Columbus didn't die because Cummins' chief executive at the time, Henry B. Schacht, and Arvin's James K. Baker aggressively helped to market the town--which is nestled between two interstates--to companies looking for a location from which to supply the industrial heartland. Schacht even appointed a Cummins executive, Brooke Tuttle, to spearhead the effort.

Ten years later, Tuttle has managed to lure 28 companies, among them Toyota Industrial Equipment's forklift operation and 11 other businesses from Japan, and has created 6,580 jobs. Unemployment is under 4%, compared with 12.3% in 1983, and now Schacht is worried about a labor shortage. Even in Columbus, however, the new jobs pay just $8 or $9 an hour. Most Cummins workers get $15. For old company towns, it seems, even the best news is a mixed blessing.By Kevin Kelly in Columbus, Ind., with bureau reports


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