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World at Crossroads : U.S. Holds Key to '90s Economics

Comeback, Rebuilding the U.S. Economy, Last of a series

December 30, 1987|TOM REDBURN | Times Staff Writer

AT&T remained committed to producing business telephones, including those of its popular Merlin line, at its Shreveport Works on the southern edge of the city. But for the rest of the year, wave after wave of layoffs hit the area with little warning as the firm phased out home-telephone manufacturing and restructured its business-phone operations to take advantage of advances in automation.

Henderson, who had been earning about $10 an hour, was one of those who lost her job in the first wave of layoffs. "There were endless rumors, but when the announcement came I don't think anybody was prepared for how bad it was going to be," she said in an interview. "And then they kept saying things wouldn't get any worse, but they did."

Henderson was luckier than many others in similar situations. Just a few days before her company-paid medical insurance ran out, her daughter, then 4 years old, went into the hospital for a costly operation to cure her kidney ailment.

"Sarah wouldn't have lived had we not had it done then," Henderson said. Even with the insurance, which an estimated 35 million Americans lack, the family spent two years struggling to pay off the out-of-pocket expenses.

Meanwhile, Henderson's husband, who had lost his job about the same time she did, "almost miraculously" found various jobs in the severely depressed local economy and she entered the federally sponsored retraining program to learn respiratory therapy.

The AT&T plant cut its work force from 7,400 to fewer than 4,000. Together with the disaster in the oil industry and other manufacturing cutbacks, unemployment in the area reached a peak rate of 14% at the end of last year, long after most regions of the country had emerged from the 1981-1982 recession.

Don Jones, mayor of Bossier City, said that AT&T's decision to cut back was what finally jolted local officials into action.

Change of Outlook

"Before, I guess we thought of ourselves as a sleepy Southern town with cheap labor to offer corporations from the North," Jones said, "but we realized that we couldn't keep competing in the global economy on that basis any longer. We'd never be able to match the wage levels of Third-World nations, so it was time to see if there was any other way for this area to survive."

With the help of Morrison's consulting firm, local business and political leaders developed a plan for stimulating realistic investment projects that took advantage of Shreveport's location.

"Shreveport is where the South meets the West," Arnold Lincove, a business mover and shaker, said with a touch of local boosterism. "That gives us a crucial advantage at the center of a key population region of the country."

In fact, Shreveport's location--close to where the nation's population center is expected to be in the year 2000--has already attracted major distribution facilities run by Honda, the Japanese auto and motorcycle firm, Upjohn, a major drug manufacturer, and even AT&T.

Like many other local leaders around the country, the Shreveport political and business establishment is desperate to attract foreign investments, particularly from Japan. Bossier City's Jones acknowledged a lingering public resentment over Japan's role in World War II and its more recent business conquests, but he said that such objections have been overwhelmed by the pressing need to find a source of wealth to generate jobs.

War Grudge Dismissed

"We could stay mad for another 40 years," Jones said, "but that would just mean that someplace else would end up with the business."

People here dismiss fears over the influx of foreign investment and demonstrate none of the anxiety visible in some parts of the industrial Midwest over the establishment of new foreign manufacturing operations.

In contrast to Rep. Marcy Kaptur (D-Ohio), who recently complained that the Japanese "come in and establish what amounts to colonies in the United States with their own suppliers," Jones said he was proud that his five trips to Japan in recent years have brought Japanese business to his area.

"We have to go where the money is," said Lea Hall, a real estate developer. "We are trying to shake off our reliance on the oil business. It was overbuilt, over-borrowed and over the edge."

Hall is building a huge warehouse center, called the Interport project, next to the AT&T plant under an obscure federal law that allows local public entities to establish "foreign trade zones." Dozens of areas throughout the country have set up such foreign trade zones, which allow them to bring in duty-free parts and supplies from overseas for local manufacturing and then export their products with low tariffs or no tariffs at all.

Local, State Responses

More so than at the federal level, some state and local politicians are reshaping their own agendas in response to global economic trends. There is no talk of retreating into protectionism, for instance, in a recent report from the National Governors' Assn. entitled, "Making America Work: Jobs, Growth and Competitiveness."

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