Gary, the tough, old steel city in northern Indiana, could not be more different from the fresh-air farmlands in Illinois` Lake County, up the North Shore from Chicago.
Except for one thing: They are examples and symbols of the economic revival that has brought new life to the Chicago area.
The new Gary economy is still a blue-collar affair, centered on steel but using the latest in computerized techniques. The new Lake County economy is more white-collar and obviously high-tech, owing more to bacteria-free laboratories than grimy mills.
The boom has come suddenly to both. Robert Weskamp, president of a small manufacturing company, Wes-Tech Inc., recalls that when he moved to the Buffalo Grove Commerce Center in 1983, ”there was nobody here.”
”It`s all filled now,” says Weskamp, who moved to the center from nearby Wheeling in Cook County. ”Everything`s sold, and there`s a lot of building going on. All this in the last two years. Incredible.”
Wes-Tech had 45 employees when it moved north and has 92 now.
Does Weskamp miss Chicago and Cook County?
”I was a plant manager once in the City of Chicago, and I don`t want to talk about it,” he says. ”I sure as hell wouldn`t move back across the county line and double my taxes.”
Wes-Tech is part of what may be one of the biggest economic booms in the United States: the sudden takeoff of Lake County in the last two or three years. Commercial and industrial parks seem to fill almost as soon as they open, with a mixture of offices and small, clean manufacturers like Wes-Tech. Lake County`s reputation is as a bedroom county for Chicago. It also had a traditional base of heavy industry along the lakefront in Waukegan and North Chicago, much of which suffered in recent years.
”It`s a microcosm of Rust Belt America,” says Warren Wood, the county`s senior planner. A United States Steel Corp. wire plant closed. A Johns-Manville Corp. plant that once had 3,000 workers is down to 500. Outboard Marine Corp., a maker of outboard motors, has shipped much of its assembly-line work to the Sun Belt. An American Plastics Co. plant burned down and was never rebuilt.
Part of the old industrial lakeshore is being rebuilt into marinas and housing. But the economic heart of Lake County has moved elsewhere: to the industrial and commercial parks and especially to the health-care empires of the county`s two biggest employers, Abbott Laboratories and Baxter-Travenol Laboratories Inc.
Abbott and Baxter-Travenol together employ more than 15,000 people in the county, the vast majority of them Lake County residents. Together, they anchor the boom.
But both have been in Lake County for years. Why have things only now taken off?
”In Lake County, we have the beginnings of a high-tech health-care boom like you had in electronics in the Santa Clara Valley in California in the 1960s,” Wood says. ”Abbott has been innovative for years. The difference now is that there is a critical mass of these companies. It`s been a cataclysmic change, suddenly, after years of small changes.”
Wood theorizes that the aging of the American population and the growing need for health-care services and goods together with the explosion in research and high-tech methods in medicine touched off the boom.
In addition, Lake County was an area whose time had come. northwestern Cook County and Du Page County were filling up, and companies were looking for places to expand. County officials say many of their new companies moved from Cook County–not necessarily because they were unhappy but because they needed more room.
In addition, many executives lived in such communities as Lake Forest, Lake Bluff and Barrington and were tired of the long commute to downtown Chicago. The county also has plenty of land, a well-educated population–one out of four adults has four years of college–good local schools and a nonunion tradition.
Another factor is taxes, a point raised by every businessman who was interviewed. In Cook County, industrial and commercial property is assessed at 40 percent of its value; in Lake County–and Du Page, too–the assessed value is only 33 percent.
”There`s a big movement out of Cook and Chicago,” says Robert Lamphere, manager of the Lincolnshire Commercial Center. ”Politically, it`s so divisive that people are just sick of it.”
Lamphere says 55 companies have filled up his park in the last 30 months. Half are offices, half industrial. Nearly half are either partly or entirely owned by foreigners. They include pharmaceutical companies, makers of robotics equipment, a branch of Abbott and such high-tech high-fliers as Bio-Imaging Research Inc., which builds prototypes of diagnostic and inspection machines, including a new CAT-scanner sold to the Japanese firm Toshiba.
Bio-Imaging had 24 employees when it arrived from Cook County 18 months ago. It has 43 now and expects to have 75 by next year. Most of them are researchers and engineers, the sort of people who used to graduate from Illinois universities and then go to California to work.
Bio-Imaging`s president, John F. Moore, says it is useful to have the big drug companies nearby as neighbors and customers. Abbott, for instance, says it spends $180 million locally every year with purchases of everything from chemicals to pencils. But the links are more complex than that: Bio-Imaging is helping to support local firms, such as an electronics company in the same park, with its purchases.
Lake County`s economy is a matter of ”corridors”–along U.S. Hwy. 41, Int. Hwy. 94, Ill. Hwy. 21 and Lake-Cook Road. Ironically, the lure of these highways has resulted in Loop-style traffic jams and a scrambling by county officials to keep ahead of the problems caused by their success.
Lake County`s development appears to be spreading out now. ”For sale”
signs sprout like cornstalks from the county`s still undeveloped farmland.
One thing that Lake County doesn`t have is a major university or any state university. It is a rare example of a high-tech boom that is not fueled by a great university nearby.
Like many boom areas, however, Lake County has an active community college, the College of Lake County in Grayslake. Such colleges often provide needed technical training, both to workers and to managers who may be baffled by the rush into the information economy.
Russell Hamm, director of economic development at the College of Lake County, said his office provides on-site technical training, runs an Automated Industrial Center, demonstrates robots and teaches computer-aided design.
To some degree, new companies have spun off the large drug companies, but available information indicates this has not happened as much or as fast as the spinoff of companies from the universities in, say, Massachusetts or California.
”Look what we`re doing without this (university-economy) cooperation,”
Wood says. ”Imagine what we could do if we had it.”
Lake County`s takeoff was probably inevitable as Du Page County and northwestern Cook County filled up. The revival of Gary, the largest city in Indiana`s Lake County, is more of a surprise, the result of a civic reaction to the recession coupled with a major trend in American steelmaking.
For Mike Craw, this makes Gary the obvious place to open a business.
”Why here?” asks Craw, who manages a Doolen Steel Co. operation that takes leftover ends of steel rolls and turns them into usable metal. ”Because here is where the steel is. In our opinion, this is the only place where they`re going to be melting steel in 10 years.”
Probably no area of the country was as hard-hit economically over the last 10 years as Gary, Hammond and the other steelmaking cities of northern Indiana. The once-booming steel mills laid off 30,000 of their 70,000 workers, throwing the area into what looked like a permanent depression.
No one today would mistake Gary for Lake Forest. But there are signs that northern Indiana is sharing in the economic revitalization of the Chicago area and doing it with the same industry–steel–that caused its troubles. Moreover, it appears to be beating Chicago in the race to become the Midwest`s steel center.
This is important because many analysts agree with Craw that when the American steel industry gets done shaking itself out and slimming down, most mills in Pennsylvania and Ohio and on the two coasts will be closed. What is left will have ”imploded” into the Midwest, and much of that will be centered on the Gary-Chicago region.
Already this area makes 29 percent of all American steel, up from 22 percent in 1960. But of the 29 percent, 76 percent is made in Indiana and only 24 percent in Illinois.
The Doolen firm, which used to have 12 plants around the country, now has six. It closed two–in Chicago and Hainesport, N.J.–and moved last July into the Great Lakes Industrial Center in Gary.
This center, a vast shed with 23 acres under its roof, is a sign of the times. Built by the government at the end of World War II to make armor plating, it passed through several hands before becoming the Gate City steel service center in 1974. At its height, it employed about 100 people. Gate City phased it out in the late 1970s and was about to sell it in 1982 when two local realty companies talked the firm into making it an industrial park, a place where smaller companies could set up shop.
In late 1984, it was purchased by Capital and Regional Properties Corp., a Chicago firm run by John S. Gates Jr.
”Around Christmas of 1984, it really started to take off,” Gates says.
”Simultaneously, Gary was taking off.”
The center has 15 companies in it now, employing more than 800 people. Nine firms came from other states. Gates said he expects to have it filled and employing 1,200 people later this year.
Down the street, the old Steel City plant has become a similar industrial park, holding 18 companies employing 200. Elsewhere in Gary, other companies are springing up, like Rockwell Machine and Coating, which bought a plant from a failing company last September, hired its 30 workers, took on 60 more and expects to be employing 140 within a year. Conam Inc. has moved from Itasca, in Cook County, into an old Gary liquor warehouse to do the kind of metal testing that the mills used to do themselves. It expects to provide 70 jobs.
Publishers Typography Inc. has moved its headquarters and an expected 500 jobs from Long Island, N.Y., to Hammond to do computerized printing for industry.
Most of the new companies have something to do with steel. All are small and are likely to stay that way. And most of them are doing things that the big steel companies used to do themselves, before they began trimming down.
Rollform, for instance, makes corrugated products. Roll & Hold specializes in trucking. Kenwal stores and moves materials. BMI lines cars used to carry hot steel.
Caster Maintenance has 50 people doing nothing but tending the continuous casters, a new and cheaper way to make rolled steel, which U.S. firms are belatedly installing in their effort to catch up with the Japanese. The casters run for about 320 hours before they need maintenance. Instead of keeping maintenance crews on staff, the companies hire Caster Maintenance on a contract basis.
Inland Steel Co.`s plant at Burns Harbor is about to install its fourth continuous caster, and U.S. Steel`s Gary Works is building its second one. Both companies, plus Bethlehem Steel Corp., are making major investments in their northern Indiana mills in an effort to modernize themselves.
”This mill is our centerpiece, our flagship,” U.S. Steel spokesman Thomas R. Ferrall says of the Gary Works. So far, he says, the plant has been able to cut its man-hours-per-ton in half, making it competitive with any in the world.
One reason the Gary Works is more efficient, of course, is that it employs so many fewer people: 7,600 now compared with 22,000 in the late 1970s.
It is tempting to hope that the new smaller companies will gradually soak up the workers who lost their jobs at the big mills, but Ferrall and other local officials concede that this is unlikely.
Instead, Ferrall says, ”the idea is to rebuild the economy bit by bit, using the steel mills as a basis and a magnet.”
”We`re doing all our hiring strictly around here,” Doolen`s Craw says.
”There`s an ample supply of labor.”
Most of the workers at the Great Lakes Center appear to be younger. Of the 15 companies in the center, 13 are nonunion and, according to officials, most pay slightly below union wages.
”That`s not a hardship for me,” says John Oelberg, 25, a worker at Gary Machine Co. ”But the older guys, they`re not making as much, and it seems like a hardship for them.”
Harry Piasecki, District 31 organizing coordinator for the United Steelworkers of America, says the union is ”diametrically opposed” to the growing number of nonunion companies opening around Gary but is having trouble fighting the trend.
Gary`s downtown is still depressed and its crime rate high. But unemployment in the Gary-Hammond region is down from nearly 19 percent to 10.7 percent now. Gary has set up an enterprise zone, with a range of tax breaks for new industry, and claims this has created 241 new jobs. (The claim may be exaggerated. Rockwell Machine, the biggest new firm in the zone, says it located in Gary ”because that`s where the steel mills are” and didn`t even know it was going into an enterprise zone.)
”Time and fear have worked to our benefit,” Richard Griebel, president of the Northwest Indiana Forum, says of Gary`s sudden economic collapse in the early 1980s. ”It caused a public agenda to be identified. It brought up private leadership in a way that Chicago hasn`t done.”
”Our comparative advantage is proximity to the mills,” says John Betjemann, president of the Methodist Hospital of Gary. ”We are looking to companies that want to feed off that trough.”
One fallout from Gary`s crisis is a new interest in economic development by Mayor Richard Hatcher. Hatcher, in office through Gary`s decline, was flayed by his opponent in his last re-election campaign for overseeing the city`s collapse. At the same time, the federal government cut back the flow of money to cities like Gary.
By all accounts, Hatcher is vigorously recruiting new industries and cooperating both with business and with the Republican-run state government. Most visibly, he attends virtually every meeting of the Monday Night Group, a panel of local government, business and labor leaders formed a year ago to promote development.
”Hatcher`s got religion now,” according to one businessman, ”and businessmen are responding to him. This would have been unthinkable five years ago.”
Tuesday: Chicago–the dumbbell economy.
