Chicago: Hizzoner Does A Double Take

Chicago Mayor Richard M. Daley's common-man, street-smart demeanor has made him a natural heir to his famous father. But his touch hasn't been as deft when it comes to economic development. Campaigning in a gentrifying North Side neighborhood in 1989, he dismayed industrialists with his vision of turning small factories there into yuppie condominiums. And less than two years ago, Daley stunned economic leaders in newspaper and TV sound bites with the message that manufacturing was passe.

Today, there's a very different tone. As the mayor tours Chicago's wards, he routinely stops in on local businesses. He's playing a direct role in retaining such employers as Tootsie Roll Industries Inc., which recently expanded on the Southwest Side, or bringing fast-growing upstarts in from the suburbs. And he's meeting for breakfast with 15 different Chicago executives every three weeks.

LAST STRAW. What happened? Simply put, the lure of the 'burbs and out-of-state locations was turning Chicago's job exodus into a rout. The mayor finally caught on. The last straw: In late 1992, only months after USX-U.S. Steel Group and Oscar Mayer Foods Corp. announced plant closings, catalog giant Spiegel Inc. decided to uproot 2,200 jobs from Daley's own Bridgeport neighborhood in the city to Columbus, Ohio. "It looked like we were heading toward another bankruptcy case like New York," notes Edward J. Noha, chairman of CNA Financial Corp. and chairman of the city's Economic Development Commission.

Daley can no longer be accused of neglecting the city's business community. In late April, the mayor launched a record $220 million spending program on pockmarked streets, viaducts, and sewers. And his long-standing efforts to bring a riverboat gambling-and-entertainment complex to downtown Chicago got back on track early in April, when a bill was introduced in the Illinois legislature.

He's hoping to channel as much as $100 million in annual casino tax revenue into job training, public education, and cleanup of contaminated city land--all top items on business' agenda. And Chicago's status as one of the nation's highest-taxing business centers may change: The mayor is considering scaling back the $5-per-employee monthly head tax and the 5% tax on interstate phone calls.

The 51-year-old mayor is also moving to call in political chits from Springfield to Washington. Daley's relationship with Republican Governor James Edgar is warming, which could prove helpful in winning passage of the casino legislation and a broad reassessment of state taxation. But Daley also is close to Dawn Clark Netsch, the Democrat who's vying to unseat Edgar this fall. The mayor is milking his solid connection to the White House, seeking federal funds for land cleanup and trying to gain "empowerment zone" status for an area of the city. And the Democratic National Committee is leaning toward awarding its 1996 convention to a city that hopes it can erase the memory of a bloody gathering in 1968 presided over by Daley's father.

"STRONG HEARTBEAT." Not surprisingly, Daley's efforts are winning kudos from his business constituency. "He understands that if business improves, social difficulties improve," observes Leo F. Mullin, president of the city's largest bank, First Chicago Corp. Executives also are impressed by Daley's privatization of many government services.

In fact, the downward spiral in manufacturing jobs appears to have eased, and the huge overhang in vacant downtown real estate, though still at nearly 20%, finally appears to be receding. Banks such as First Chicago, along with big accounting and consulting firms, are prospering by virtue of Chicago's position at the heart of the robust Midwest economy. And retailers such as Montgomery Ward, Home Depot, and Builders Square are actively eyeing city sites.

To be sure, the city still is beset by grave social problems. That's why retail display manufacturer RTC Industries Inc. recently moved most of its operations, as well as 300 employees, from Chicago's Southwest Side to Rolling Meadows, 30 miles away. "What finally turned us off the city was when job candidates saw where we were and didn't bother to show up for interviews," says President Richard Nathan. An even bigger loss: On Apr. 18, Motorola Inc. decided against locating a big cellular-phone plant, providing 3,000 jobs, in the city.

Daley seems to take the challenges in stride. Rolling an unlit cigar in his hands, he admits that Chicago won't be the ideal location for all kinds of manufacturers. But, he's clearly more upbeat than just two years ago. "I think this city has a strong heartbeat," he says. It's a sentiment a growing number of employers now share.

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