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Economic development in northwest Indiana: Chicagoland companies are looking across the border.

Don't tell George Perneczky stories about the nation's economy going through tough times. His Carestone Inc. in Hammond is in the midst of a $2 million relocation and expansion project.

"We plan to be aggressive," says Perneczky, the company's president. "We employ about 30 at the moment, but by the end of '97 it will be 200 people."

Those are jobs that will be in Northwest Indiana, not Cook County, Ill., where Carestone was located until just last year. The company, which uses state-of-the-art equipment to improve the quality of flat-rolled steel, will be a few miles closer to many of the mills it serves.

Much of the job growth in Northwest Indiana can be attributed to companies in neighboring states looking over the border and seeing greener pastures--or, more specifically, generally lower taxes.

"There is a difference in doing business in terms of help, taxes and worker's compensation costs," says Perneczky, whose company has visions of expanding into international markets. "In Cook County, they aren't interested in working with small businesses to get job growth. But they'll give away the store to get a big company."

Paul Esparza tells a similar story. He and his wife, Dorothy, own Esparza Industries, which used to be located in suburban Chicago. In September the company moved out of Maywood, Ill., to the Starke County town of Knox. Within 18 months of the move, Esparza plans to employ about 120 people, who will make customized aluminum windows and doors.

In addition to lower labor costs and property taxes, he has a work force that can't use the morning rush hour as an excuse for arriving late. "The people we work with now are all local, from here in town," Esparza says.

The Esparzas were the first to move into the first phase of an industrial park Starke County residents paid for with a new economic-development income tax. The investment was necessary if the community was going to attract business, says Gordon Campbell, head of the Starke County Development Foundation.

Foundations or local offices with someone versed in the federal, state and local programs that can be used to help a new or existing business grow can be an important factor in creating jobs during slow economic times, says Dave Ryan, director of economic development in Newton County.

His office was able to boast of several success stories during 1992. Capital Products, the county's largest employer, added a 2,000-ton press that meant 60 new jobs. Adkev Inc. used a state loan program and local property tax abatement to help finance an expansion at its Goodland plant.

"Something like that has a nice impact on a community," Ryan says. "You've got to take care of the businesses that are already here. These things aren't happening just because we're a bunch of nice guys in Newton County."

Like several other counties, Newton has made infrastructure improvements to make the area more attractive to industry. A $12 million investment has added to sewer and water capacities. Tax abatements have been offered as an enticement.

Abatements may be one of the most powerful cards local government has to play when competing with other communities for new business. Lake County's Merrillville used abatements to persuade two companies, NSU Corp. and Dawn Foods, to make multimillion-dollar investments in the community.

The area's industrial base also continued to grow, despite tough economic times shouldered by many industries. In late 1992, Siemens Power Corp. broke ground on an expansion that will nearly double the size of the present plant in Hammond. The company makes coils used in industrial motors.

Heavy industry in other parts of Northwest Indiana also had some success stories to tell. Indiana Pickling and Processing Co. had its grand opening in April. The pickling process removes iron oxide from hot-rolled steel coils. Located at Burns International Harbor near Portage, the company is close to mills, transportation routes and the water necessary for the pickling process.

The harbor itself also completed financing a $3.2 million expansion project, with help from the state and U.S. Department of Commerce. The harbor expansion is intended to spur further investment at the port, which can provide access to thousands of miles of inland waterways. The access the lakes and rivers provide is important to the area's steel industry.

Despite diversification and growth in service-industry jobs, Northwest Indiana intends to maintain its reputation as the country's steel-producing capital, says Thomas McDermott, president and chief executive officer of the Northwest Indiana Forum. McDermott resigned a year into his third term as Hammond's mayor last year to accept the post. The forum coordinates economic-development efforts in much of the state's northwest corner.

"If steel is going to be made in this country, we want it made in Northwest Indiana," he says. Although the mills don't employ as many as they once did, they have added the modern equipment needed to be competitive, he points out.

McDermott's long-term strategy is to continue pushing for infrastructure improvements that make business growth possible, and building on efforts to attract businesses looking for a better--and less taxing--home.

"I'm going to tell people we have a better quality of life here," he says. "And if you still want to go to Chicago, you're only a half hour away."
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Title Annotation:Regional Report Northwest
Author:Skertic, Mark
Publication:Indiana Business Magazine
Date:Jan 1, 1993
Words:879
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