Midwest industrialists hopeful but wary about Reagan economic plans

With Midwestern mayors just back from hearing President Reagan list his budget- cutting priorities, industrialists here are both welcoming and wary toward the new administration's economic battle plans.

There is welcome for promised cuts in federal regulation and for tax changes to encourage capital spending on new plants and equipment.

But from Detroit's stalled auto assembly lines to East Chicago's cooled steel mills, there is also some board-room uneasiness. Government unemployment payments, retraining programs, and urban development grants have been paying many bills. Reagan administration cutbacks in these areas will hit hard in cities already hard hit by a general recession and by a depression for the steel and auto industries.

Less federal money flowing into the Midwest's troubled cities, it is argued, is bound to step up the flow of industry and jobs to the Sunbelt.

One leading Chicago industrialist -- who has helped turn his own company from an auto-industry problem into a highly diversified corporation with a fast-track record -- sees all the dangers. But Borg-Warner Corporation chairman and chief executive officer James F. Bere also sees great opportunities.

Speaking to the Rotary Club of Chicago, Mr. Bere stressed that government program cutbacks could create major problems -- if business doesn't step in to fill the gaps with more cost-efficient and humanly effective programs of its own.

Reviving "the industrial heartland, where the worst of the recession has been concentrated," Bere warned, depends on business changing dramatically from top to bottom, from management to shop workers. Instead of traditional heavy industry, he said, the Midwest must wake up to "the microprocessor and other developments like fiber optics, robotics, and lasers." This revolution, Bere explained, means creating "a new kind of labor force . . . more highly skilled, better educated, more flexible, and more involved than we have ever needed before."

Bere called on business to invest directly in training these new workers -- rather than continue to rely on schools and government programs to do the work. He said "the incredibly high unemployment rates for black and Hispanic youngsters is a national disgrace" -- a disgrace which he argues can and must be corrected by business itself.

Bere explained that, as chairman of the Rehabilitation Institute of Chicago, he has seen how the physically disabled can become highly motivated and productive workers. He called on businessmen to make the same commitment to "the socially, intellectually, or economically handicapped."

Some major corporations have already begun to provide remedial reading classes for new employees, he said, adding: "We will have to go much further than that, however. We have to be ready to teach them things we almost never needed to understand ourselves -- basic and even advanced technology, communications, and economic systems."

Industry-run training programs for new workers "would be an extra cost of doing business," he admitted. But Bere insisted such training will prove an excellent investment for each business, for the Midwest, and for the nation because "it would be a lot cheaper than the recurring costs we now have for recruiting, inadequate training, inadequate work, the cost of clearing up after inadequate work, an d rehiring to start the cycle all over again."