News From Terre Haute, Indiana

March 8, 2008

MARK BENNETT: Terre Haute, Midwestern towns ‘caught in the middle’ of a changing, global economic puzzle

By Mark Bennett

TERRE HAUTE — Toothpaste enlightened me.

On my first experience in a foreign country, my wife and I found ourselves in a convenience store in Cancun, Mexico. There were a few legitimate cultural differences — a dog-sized condor hitting the windshield of our VW Beetle taxi, two entertainment-starved and possibly intoxicated locals thinking I looked like Chuck Norris, and neither of us being able to speak Spanish. But we’d forgotten to pack toothpaste, and while wandering the picturesque white beaches, we found this tiny store.

We walked in and asked the guy behind the cash register for some toothpaste. Fittingly, he spoke no English. So we employed the international symbol for dental care by gritting our teeth and pretending to brush.

“Ah, Col-ga-tay,” he said.

Puzzled, I stared at him. Then my more perceptive better half responded, “Yes, Colgate.”

You say, “Col-ga-tay,” I say, “Colgate.” Either way, toothpaste is toothpaste. The writing on the tube may be different, but the stuff still brushed the same and everybody in the civilized world needs it.

In many ways, Terre Haute and the Midwest face similar economic realities in the 21st century.

Within the past year, two of Terre Haute’s longest employers shut down production here while also investing heavily into similar operations in foreign countries. Pfizer eliminated its inhaled insulin product Exubera at its local plant, cutting 660 jobs by this spring. Then last month, Pfizer announced it would create a new inhaled products technology center at its facility in Amboise, France, which opened in 1970. Pfizer, the world’s largest pharmaceutical maker, had considered Terre Haute, where its plant opened shortly after World War II. “But in the end we determined that the center fit best with the Amboise operation,” said spokesman Rick Chambers.

Also last year, International Paper closed its Terre Haute mill in October, ending 156 local jobs and a 90-year history here. A month earlier, International Paper, the world’s largest paper and packaging company, announced it would invest $650 million in a joint production venture with Russian company Ilim. That capital infusion would go into four Ilim mills in Asia. The move, according to a MarketWatch report, would allow International Paper to expand into Asia, where paper sales are expected to exceed the flat North American market by 2015.

“It’s not out of the question to manufacture a product anywhere else in the world, and that just makes the job of economic development that much tougher,” said Steve Witt, president of the Terre Haute Economic Development Corp.

Tougher, but not impossible, he added.

“We’ve lost projects to other parts of the world, but we’ve had good success with foreign-owned companies investing in our community as well,” Witt said. He rattled off a sizable list of current Terre Haute firms with foreign ties, including CertainTeed (a subsidiary of French siding corporation Saint-Gobain), Boral Bricks (Australia), Aisin Brake & Chassis (Japan), steelmaker CSN (Brazil), and auto steering column manufacturer ThyssenKrupp Presta (Germany), among others.

“It’s a two-way street in a lot of ways,” Witt said.



Plan for change


Terre Haute saw the sunnier side of that street earlier this year, thanks to Sony DADC, a subsidiary of Tokyo-based Sony Corp. Sony’s Blu-ray — the next-generation optical disc format for high-definition video — won a market war with rival Toshiba’s HD DVD. Though Sony won’t yet reveal what plans it might have for added jobs or production expansion, Indiana and local leaders are hoping for the best.

“If it succeeds like it looks, you could have a big upside,” Indiana Gov. Mitch Daniels said during a visit to Terre Haute last month. “You just don’t know.”

The unpredictability of global competition puts Terre Haute and other Midwestern cities in a change-or-fade-away position, said Richard Longworth, senior fellow at the Chicago Council on Global Affairs and a former Chicago Tribune foreign correspondent.

The 73-year-old Iowa native criss-crossed the Midwest to research and write “Caught in the Middle: America’s Heartland in the Age of Globalism.” He found lots of towns facing a change-or-die situation. Some, though, refuse to abandon an old-school mentality of hinging all of their economic hopes on landing one big manufacturing plant, where every able-bodied citizen could work, with or without a high school education.

“I found a lot of that in Indiana,” Longworth said. “What was good enough in the past is not good enough now.”

Though the jobs lost at Pfizer represent “the kinds of jobs a town like Terre Haute could want,” Longworth thinks this city’s diversity of employers shows the community is taking the right approach to building a more stable, modern economic base. A business incubator involving the City of Terre Haute, Indiana State University and Rose-Hulman Institute of Technology “is very important.”

Some towns never tap into the talent resources at local colleges, Longworth said. That had been the case for decades in Peoria, Ill., where Bradley University is located. In recent years, though, Bradley and that city — home of earthmover giant Caterpillar — joined forces to form a business incubator.

Global-thinking cities also attract immigrants for professional white-collar jobs, as well as blue-collar. Communities hoping to survive the Rust Belt syndrome must become a desirable place for people of any origin, Longworth explained. Only 2 percent of Vigo County’s population was foreign-born, according to the 2000 Census. That’s less than the state average of 3.1 percent and the national average of 11.1 percent.


Towns re-invent themselves


The pivotal transformation for cities is to shed obsolete bonds with the past. Longworth emphasized that real, action-oriented coalitions — not just chamber of commerce types — must involve colleges, businesses, city government and unions, and answer the question, “Where do we want to be 20 or 30 years from now?”

Akron, Ohio, shifted from being the Rubber Capital of the World to a more diverse economy. Peoria saw Caterpillar shift its local operation from production to a corporate headquarters. Warsaw, Ind., turned itself into one of the world’s primary artificial human joint manufacturing hubs.

Midwestern towns should also team up to lure industries, rather than duel with each other, Longworth said. Such regional partnerships make it easier for smaller cities to pool resources and lobby overseas companies. “You’re not in competition with Peoria and Milwaukee anymore,” he said. “You’re in competition with China and India and, apparently, Europe.”

Witt is optimistic about Terre Haute’s chances. Despite some recent job losses, the local economy is better off than in the 1980s, when unemployment and interest rates both neared 13 percent. “Relatively speaking, I think things are pretty good,” he said.

Some prime possibilities for new companies would be in pharmaceuticals, distribution hubs, agricultural firms, research and development, and corporate headquarters, Witt said. The only corporation with a local headquarters now is First Financial Corp. Manufacturing, now of a more technologically advanced kind, will remain a primary goal for Witt’s agency.

“We’re working every day to bring new job prospects to the community,” he said.

“Sometimes, it can be a little frustrating. I guess what keeps us going is we have access to information about companies who may be looking at the community,” Witt added. “When you get a new project possibility coming to the community, it’s like Christmas throughout the year. That’s what keeps us buoyed.”

A diversified, global plan will determine whether Midwestern towns stay buoyed or sink, Longworth said.

“Terre Haute, like a lot of towns, was created by an industrial era that is gone,” Longworth said, “and we’re fighting for our lives.”

Mark Bennett can be reached at mark.bennett@tribstar.com or (812) 231-4377.