By ELIZABETH HOPP-PETERS

Recovery for Rockford?

In midsummer Rockford had the highest unemployment rate in the country. National media attention and a foreboding outlook for 1983 woke its citizens to the urgent need to recapture a firm economic base. A collective attitude is taking hold among bankers, business leaders, union workers and government leaders with the prime objective to attract and hold onto industries. One problem to overcome is the guaranteed business loans offered by other states

Photos by Elizabeth Hopp-Peters The empty National Lock plant in Rockford awaits a new occupant. The plant has been vacant since the company moved its 500-man hardware division to North Carolina.

ROCKFORD — Three Swedish immigrants founded National Lock Co. at the turn of the century in hopes that hard work would bring them success in the land of opportunity. Their idea for a new cabinet lock grew into a company that by the 1920s became one of Rockford's largest employers.

Today their giant plant stands empty on the edge of the city's industrial section. The shadow of a large, dying tree falls against its wall each winter afternoon, and the 10-story landmark clock tower has been transformed into a poignant monument to Rockford's past. Opportunity has evaporated and the belief in a good day's work shattered for the hundreds of employees who no longer report for work at the factory. Last summer National Lock, which was sold to a Peoria firm in the 1930s and purchased by a Dallas-based corporation in 1971, packed up and moved its 500-man hardware division south.

"You work your whole life and your world falls apart," said National Lock employee Una Maples after learning she had been laid off after 27 years with the company. "It's all down the drain." The bad news came in August after months of negotiations with the UAW and unsuccessful intervention by city officials.

The fate of National Lock Co. is not an isolated incident. All over the city last year businesses were laying off workers or shutting down completely. In many cases employees were told on Friday not to return to work the following Monday. Business bankruptcies and home foreclosures hit all-time highs, and crime and domestic violence increased.

Last summer, the city was stunned when it woke to find its unemployment rate the highest in the country. The city held this dubious distinction through June and July, and residents began to see that the sluggish condition of the local economy was not temporary. They saw that the bottom was ready to fall out of their way of life. Since then, the rate has increased: Unemployment in November topped 21 percent for the Rockford metropolitan area and hit a record 26 percent for the city itself. By the end of 1982 30,000 Rockfordians were out of work and the wages or hours of others had been cut back. The forecast for at least the first quarter of 1983 is for more of the same.

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The only thing that hasn't gotten worse is the collective attitude. A city renowned for its conservatism is suddenly ready to try anything for the sake of survival. A new mayor has stopped passing the buck like previous mayors and is taking responsibility for tackling problems head on. And Rockford's senior state representative, E.J. "Zeke" Giorgi, has a bold new idea that could help his district.

"Having the highest unemployment rate was probably the best thing that ever happened to us," says local banker Dave Knapp, president of American National Bank and Trust. "If Rockford had been fifth or sixth, it wouldn't have gotten anybody's attention."

With the national media focusing on Rockford, the magnitude of the city's woes began to dawn on the residents. Community leaders started coming up with concrete solutions instead of merely trying to inspire people to think positively. Rockford realized it was a city at the crossroads; previously, no one had thought there was anything wrong with the road being traveled. Now, for the first time, different factions of the community seem willing to stop competing with each other in order to achieve a common goal.

"I've never seen us working together like this in 22 years," said Jeanine Wortmann, who headed the Chamber of Commerce through much of 1982. Mayor John McNamara agrees. "We were all going in too many directions at once," he said, gesturing with his arms every which way. "Like the way I swim."

Indeed, the "rugged individualist" spirit has dominated Rockford's history. In the past, comprehensive planning for land use or industrial development was seen as a roadblock to personal freedom, and hence the city developed no long-term strategy. Undoubtedly, much of this philosophy stemmed from the local cultural heritage; Rockford was settled by waves of Swedish, Italian, and most recently, Indo-Chinese immigrants seeking security and a better life. They founded factories and churches. They were fiercely independent and felt they could always solve their own problems.

Mayor McNamara, a Democrat, is not quick to criticize local conservatism or Republicans. "In many ways there's been a lack of vision. But the industrialists who have wanted to preserve the status quo were the ones who built this city into something. Today we have to rediscover our entrepreneurial spirit," he said. This means thinking in new ways, one of which is for municipal government to venture into the marketplace, forming with business a relationship previously considered taboo.

McNamara wants to use public funds to help bail out the private sector. He proposes making low-interest business loans with local tax dollars, and wants to develop industrial parks that would offer low-cost land to companies wishing to settle or expand in Rockford. According to the mayor's plan, the Local Development Corporation (LDC) would loan the money to business with revenue from a 1 percent tax on Rockford hotels, motels, restaurants and lounges. McNamara says he wants to tax this "discretionary spending" to avoid placing additional burdens on the many Rockfordians struggling to make ends meet.

Rockford's lush residential areas do not betray the distress. Only upon close inspection does one notice the many

Rockford's foremost problem . . .is the local economy's dependence on manufacturing

garage sales and sports cars with for-sale signs in their windows parked along the curbs. In other parts of town, the symptoms are more obvious. People stand in lines for free cheese or meals at church-sponsored soup kitchens. When a new K Mart store announced its opening, more than 1,000 people queued to apply for 100 jobs. One man who offered free pickings from his green bean patch had hundreds of people descend on his field.

McNamara's prime objective is to keep things from getting worse — to keep businesses like National Lock from moving to the Sunbelt in pursuit of cheaper labor. This has become increasingly difficult because so many of the companies founded by local men have been taken over by conglomerates whose executives do not live and work in Rockford. "The multi-national corporations don't give a damn about this town," said Illinois House assistant majority leader Giorgi (D-68, Rockford).

Labor leaders and bankers have shouldered much of the blame for the hard times, but they and McNamara's administration can point to one case this fall where they persuaded a Rockford firm not to leave town: Sundstrand Corp. The aviation manufacturer is now scheduled to build an electronics assembly plant on 10 acres of a proposed Rockford industrial park. But last spring, Sundstrand was threatening to move four divisions out of town — until UAW members agreed to pay cuts of up to 30 percent in exchange for job security. The city later gave the land to Sundstrand and promised to secure federal funding while American National Bank put up $2 million for the LDC to buy the industrial park site. "It was a loan we probably wouldn't make in good times," said Knapp, whose bank put up the money. "All we have is a statement of good faith from the mayor that federal loans will come through and that the city will develop the land into an industrial park."

McNamara says a well-run city government — where quality services are delivered promptly — has, a lot to do with attracting business. In the 1970s, Rockford suffered from a Midwest version of Proposition 13 fever, in which property taxes weren't raised for years, and city streets and bridges deteriorated. In the past, aldermen divided the budget pie between their wards on a political basis, but now the city has committed itself to a long-range $5 million capital improvements project designed to make certain parts of the city more desirable for business. To help fund the improvements, city workers will have their wages frozen during 1983.

Rockford's foremost problem, observers agree, is the local economy's heavy dependence on manufacturing, most of which is tied to the declining auto and housing industries. Of every 100 local workers, 44 hold jobs in manufacturing, while the national average is only 22. Rockford's big industry is metalworking. Residents used to boast that their city would be one of the Soviet Union's first bombing sites

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should war break out because Rockfordians make the nuts and bolts that hold everything together. Five years ago a University of Wisconsin professor, Jon Udell, warned that Rockford needed to diversify its economic base, but the then-successful local businesses felt no pressure to develop new products or search out different markets.

Since the panic last summer, diversification has become the buzzword, even though no one is quite sure how to achieve it. Local leaders admit they would welcome with open arms anything that would bring jobs to their city. Last September the mayor led 20 community leaders on a fact-finding mission to three New England cities that had redeveloped their economies after industries fled years ago. The "high tech" industries of Lowell, Mass., and Stamford, Conn., intrigued the visiting Rockfordians, and some local businesses are now trying to apply higher technology to metalworking. Elco Industries is making parts for home computers, and a handful of local manufacturers are producing simple robots.

Rockford Mayor John McNamara is trying to lead his city out of its slump.

Many other folks are hoping to replace some of the city's smokestacks with nice, clean "paper factories," such as insurance companies. A study by Fantus Co., a national business relocation consultant, named Rockford as an excellent site for such data-processing centers. The area has a large supply of potential office workers — a vast secretarial pool willing to type and file for low wages — as well as cheap building rental relative to costs in nearby Chicago, and high quality sewer and water service, according to the Fantus report.

Fantus also found Rockford's image to be a drawback. Firms seeking a Chicago-area location don't look beyond Elgin, and draw a blank if someone mentions Rockford. "The name Rockford generally conjures up very little in the minds of most office-site seekers," the report stated. Linked to this problem is the neglected condition of downtown, which leaves a negative impression on anyone visiting Rockford for the first time. Empty storefronts and absentee landlords plague the downtown despite a new county courthouse and metro center arena. Large suburban shopping malls built north and south of the city have robbed the former retail center of its raison d'etre.

"Many people mentally associate a city with the image of its downtown. . . . The potential investor in Rockford is likely to gain the impression that the entire city is more distressed than it actually is," states the Fantus report. "Although many cities have lost business from their downtown areas over the past 10 years, Rockford's downtown has suffered more than most."

While improving downtown is a priority, the city has recently invested $1.1 million just east of downtown on a turn-of-the-century streetscape. Many of the old buildings are being restored and parking meters have been yanked in hopes of luring business to the area. Meanwhile, McNamara, a lawyer, is exploring the idea of getting a share of the sales tax from the large retail malls just outside Rockford's boundaries. He says a Minnesota law has given that state's municipalities a percentage of tax revenue from stores in outlying areas.

Armed with the favorable Fantus report, the Chamber of Comerce and a group of businessmen called the Council of 100 have begun marketing Rockford. A half-page ad in the October issue of Newsweek touting the city's virtues drew over 100 responses from as far away as Japan. A similar ad was placed in Food Processing magazine in December, but as of yet no new companies have chosen Rockford because of the advertisements. Other marketing techniques are less formal. "We want every one of our executives traveling anywhere in the world to sell Rockford," Wortmann said.

So far, Rockford hasn't had much success with out-of-town firms. Last spring, city officials and community leaders courted in secret the executives from White-Sundstrand Co. (not related to the local Sundstrand Corp.), which was considering bringing 450 engineering jobs to Rockford. Having failed, the local leaders were somewhat embarrassed when word of their foiled courtship leaked out. The company did not want to expand in a city with no advanced engineering education available. The University of Illinois did decide to offer advanced courses this spring, but the announcement came too late to hook White-Sundstrand.

Then, in November, a Canadian television assembly company which had Rockford under serious consideration for its plant site, announced that it had selected Santa Claus, Ind., because it could get better financing there. The Canadian firm would have employed 140 persons, but couldn't get a loan from Rockford banks. Local bankers said the firm, Display Devices, which was having financial difficulties in Canada, was a bad risk, but in Indiana the state would guarantee the company's loan from a private bank. On top of that, Display Devices was eligible in Indiana for a $500,000 federal grant — twice the federal dollars available in Illinois.

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The incident points up the failure of Illinois economic incentives, according to Tom Stapleton, director of the Rockford Council of 100, who worked with Display Devices to find a site and financing. "If we're going to be competitive with other states, we're going to have to get with it," Stapleton said. He thinks Illinois needs a loan guarantee program for manufacturing similar to Indiana's to encourage banks to take more risks.

Meanwhile, Knapp of the American National Bank defends the prudence of his fellow bankers: "A place like Rockford is ripe for con men because the city is thirsty for any business. We [bankers] have a duty to our depositors [to invest wisely]," Knapp said.

But Rep. Giorgi contends that Rockford's financial institutions are partly responsible for the city's ailing business climate. "Bankers here are even more conservative than most," he said. For this reason, Giorgi says he plans to introduce legislation to establish a state bank that would make high-risk, low-interest business loans. He says, "The bottom line is high-risk capital."

"There are a number of laws on the books right now designed to help business," Giorgi said, "but most are state tax-abatement programs, and the cost of state taxes compared to other costs of running a business is miniscule." The latest such law involves enterprise zones — depressed areas where businesses and banks can receive state tax advantages for their investments. Rockford has asked that its railroad yards in the depressed South Main Street neighborhood be designated one of the state's eight enterprise zones.

Enterprise zones included, existing economic development legislation doesn't do enough, according to Giorgi. He advocates funding a state bank with $100 to $200 million raised from off-track betting or public pension assets so that interest rates could be subsidized, at a maximum of 5 percent, to any business creating jobs. "The United States subsidizes loans to Brazil and Poland. Why can't Illinois do the same for businesses that will help its residents?" Giorgi reasons.

Knapp says he is leery of state or local government getting involved in the high-risk loan business because of potential monetary losses. "They don't have the expertise in the venture capital business," he said. Nevertheless, Knapp, like most everyone else in town, seems to have confidence in Rockford's mayor.

At the federal level, McNamara wants to make it easier for cities with high unemployment to qualify for Urban Development Action Grants (UDAG). Cities currently must raise private funding at the rate of five or six times the amount of the federal grant. McNamara and mayors from the nine other metropolitan areas with highest unemployment rates in the nation asked Reagan administration officials in January to reduce the ratio for their cities to 3-to-l or 2-1, reasoning that

. . .the state's second largest city seems to have a recurring identity problem

"the bottom 10" — as they call themselves — can't afford to qualify under the present criterion. McNamara said the officials said they would have an answer this month.

McNamara's plans for the LDC include administering federal loans through the Small Business Administration's new 503 program (where public and private money is loaned for capital expenses), and generally promoting economic development by providing local venture capital. The 25 LDC members would be appointed by the mayor and answer to the city council, but would be less encumbered by political lollygaging than the council itself. The LDC was pivotal in the Sundstrand land deal, observers say.

The new director of Rockford's Chamber of Commerce, John Holub, thinks part of Rockford's answer lies in Springfield, and he intends to send a lobbyist to the capitol this year. "Springfield has shortchanged Rockford. When the politicians divide up the pie, we are just forgotten," Holub said. "Rockford is enigmatic. Downstate thinks of us as part of Chicago and the collar counties think we're a farm town."

Holub says local representatives, with the exception of Giorgi, have hurt themselves because they haven't wanted to cooperate with the "Chicago machine." Whether Republican or Democrat in Rockford, according to Holub, "It's always been politically fashionable to run against Chicago."

Although Rockford tries hard to maintain its independence from nearby Chicago, the state's second largest city seems to have a recurring identity problem. Known in the mid-1800s as Midway because of its location between Chicago and Galena, Rockford needed a new name as Galena's importance as a lead-mining town diminished. Rockford was nicknamed "The Forest City" for many decades, until Dutch Elm disease destroyed much of the town's foliage in the 1950s. More recently, Rockford has billed itself as "Home of. . ." any notable resident from Olympic skater Janet Lynn to presidential candidate John B. Anderson. But as soon as such personalities fade from the national headlines, Rockford loses its distinction again. Now, with the manufacturing community changing, the city is once again searching for its identity. Perhaps residents have to figure out just who they are collectively before the city can hope to attract new industry.

In the rapidly shifting global economy, Rockford is being forced to shed its insularity in the search for new markets and investors. Descendants of immigrants currently are trying to persuade a Swedish firm to produce its airport runway components locally. The Swedes would save money by manufacturing the large metal boxes at a Rockford factory rather than shipping them overseas for American markets.

Meanwhile, the city is trying to nurture a new generation of entrepreneurs. A couple of local businessmen want to resurrect the deserted National Lock factory built years ago by the three Swedish industrialists. With a core of supervisors who lost their jobs when National Lock fled for the Sunbelt, the Rockfordians have secured financing to start their own metalworking company in a small portion of the plant. If all goes well, 50 people will soon be back to work in a locally owned business venture — a baby Phoenix hatching in the antiquated Rockford factory. □

Elizabeth Hopp-Peters, a Rockford native and University of Illinois journalism graduate, is a reporter for the Rockford Register Star.

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