Kenosha's Comeback

Stagnating not long ago, Kenosha, Wis., now epitomizes prosperity in America's manufacturing heartland

For years the small lakeshore city of Kenosha, Wis., made a host of goods for both the hard and soft sides of consumers: from wrenches and steel wire to oboes and underwear.

Then foreign competition, like a Lake Michigan squall, swept in and threatened to flatten the diligent city's industries like prairie grass. In 1988 a huge stamping plant built by the defunct American Motors Corp. shut down. The city lost 5,300 jobs and unemployment shot up into the double digits.

Today, the automaking site is just 40 acres of weeds. But instead of testifying to post-industrial "rust belt" desolation, the lakeside lot now seems to cry out "Profit!" Developers are vying for land in this city of 84,000 residents.

Kenosha shows many of the strengths that have powered the revival of manufacturing towns across the US heartland. The lines for public aid have shrunk, a diversity of non-manufacturing companies are moving in, the city's remaining auto plant is hiring, and both real estate development and population are growing.

"There were concerns last decade that we might see the demise of Kenosha but now I'm flabbergasted by the economic boom there," says David Allardice, manager of the Detroit office of the Federal Reserve Bank of Chicago.

"This is probably the healthiest our economy has been in at least a few decades," says Lou Micheln, president of the Kenosha Chamber of Commerce.

Kenosha cannot claim credit for some of the most enlivening economic forces - comparatively low electricity rates, its status as a fast-growing "ring city" outside a major urban area, and the robust revival of the US auto industry.

Bootstrap revival

Still, there is some validity to claims by the city that it has staged a bootstrap revival. The notoriously stormy relations between managers and hourly workers have improved.

Kenosha has retained a trained and experienced factory work force and kept tax rates low compared with nearby Illinois cities. It also has promoted its proximity to Chicago and Milwaukee and links to major railways, airports, and highways.

"Our part was only to make sure the land was available, the utilities were available, and there was reasonable financing. You put those all together, and you find that capitalism works," says Ray Forgianni, Kenosha's director for development.

Although the city's economy has yet to lift all boats, it has left fewer of them floundering than last decade. The lines at soup kitchens have shrunk, and at night fewer beds are taken at homeless shelters, says David Phillips, director of the Interfaith Network, an interdenominational public-aid group in Kenosha.

Unemployment in Kenosha has plummeted to about 3 percent, well below the national average. Some 50 companies have moved onto the 1,260-acre LakeView Corporate Park adjacent to Kenosha. All but one of the companies are newcomers to the area, many of them transplants from Chicago.

And Chrysler plans this April to crown a $350 million investment in its Kenosha plant by starting a new engine assembly line.

Labor relations smoother

Even industrial relations are smoother, no small feat for a city that in 1933 saw the first sit-down strike in a US auto plant. For decades thereafter, Kenosha offered "a textbook case in adversarial labor relations," says John Drew, president of United Autoworkers Local 72 at Chrysler.

On many issues labor and management are still at arm's length, as picketers against proposed work rule changes at the MacWhyte Wire Rope Company testify today. But a more cooperative tone at Chrysler has helped ease labor tensions in the city.

"There has been a better relationship and we realize that building a better quality product is a job security issue," Mr. Drew says.

As conflict gives way to cooperation, Chrysler's engine plant has won big. Production has soared and defects have dropped by 99.6 percent since the No. 3 automaker took over the Kenosha plant.

"If you have a plant running efficiently, the company's going to give you more work, it's as simple as that," says Will Heathcote, Chrysler's plant manager in Kenosha.

The next time the auto industry turns down, it is less likely to take Kenosha as far down with it as in past decades. A diversity of businesses outside of manufacturing should cushion the city economy. Myriad firms sprawl across the prairie at the area's three industrial parks. The LakeView Corporate Park includes Rust-Oleum Corp., American Steel Works Inc., Supervalu Inc., and S.C. Johnson Wax.

Kenosha is further shielded from foul economic times by its intertwining with the regional economy. The growth of both information technology and the expansion of the suburbs of Milwaukee and Chicago have integrated Kenosha with the manufacturing and service industries across the southeastern Lake Michigan shore.

Today, Mr. Forgianni says, "If one employer has a problem, we're still in pretty good shape."