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Businessweek Archives

Kenosha: Rebirth Of A Rust Belt Relic

Cover Story


When Carol Vandenberg, a 15-year veteran of the Chrysler assembly line in Kenosha, Wis., heard her plant was closing in late 1988, she thought the town "was going to fold." The divorced mother of two, who had been pulling down $15 an hour at Chrysler, sold her house and moved in with a friend. But Vandenberg didn't give up. She enrolled in computer classes at a local technical school, and today she's a computer troubleshooter for a local bank. Yes, she makes less money now than as an auto worker. But at least she's able to put a child through college.

Vandenberg wasn't the only one who thought the town of 80,000 was finished six years ago. A blue-collar town along Lake Michigan largely settled by German, Italian, and Polish immigrants, Kenosha saw its unemployment rate soar to almost 20% when American Motors Corp., and then Chrysler Corp. after it bought AMC, drastically cut back. From a peak of 15,000 auto jobs in the early 1970s, Kenosha was left with 1,000 in 1989.

Today, unemployment stands at 5% and housing is strong. What happened? The national economy improved, of course. And development officials courted companies by extolling Kenosha's central location and Wisconsin's relatively cheap energy. Many companies were attracted by the small-town feel--few people even lock their doors--and a skilled workforce.

An industrial park with only four tenants in 1984 is now full, half the 28 companies having relocated from out of state. A new 1,400-acre industrial park, developed and heavily marketed by the state's utility company, Wisconsin Electric, has attracted 33 medium-to-large companies and 3,000 jobs. Among the companies that have relocated facilities: Alpha Laval Food & Dairy, a division of Tetra Pak Processing Systems, consolidated its operations from Rochester, N.Y. and Fort Lee, N.J. Indeed, Kenosha is no longer a one-company town. Its economy is about evenly divided among manufacturing, retail, and services. Chrysler, however, remains the area's single biggest private employer, with 1,100 jobs at a Jeep engine plant. And there's even good news there: The plant is scheduled for a $144 million, 35% capacity expansion by yearend 1995.

Yet many Kenoshans still find themselves working harder for less money and fewer health-care benefits. United Auto Workers Local 72 President Rudy Kuzel scoffs at the turnaround: "The top 25% in Kenosha are doing well. Almost everyone else is working for half of what they were earning at Chrysler."

COMMUTERS. Some residents complain that it's hard to find well-paid work because the better jobs are often filled by commuters from Chicago, an hour south, and Milwaukee, a half hour north. Take Matthews Paint. When the Wheeling (Ill.) company relocated here 18 months ago, 39 out of its 40 employees kept their Chicago-area homes and began commuting north. The company, which supplies paint to Disney theme parks, has hired only four area residents, according to Bret Matthews, sales manager at the family-owned company.

Still, local stores say that they are benefiting from the new Kenosha. Tenuta's Liquor & Deli reports that it is selling more imported prosciutto at $19.99 a pound these days, while sales of bourbon are down. That may not help the country's trade balance, but it makes upbeat news for Kenosha.Susan Chandler in Kenosha, Wis.

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