(FORTUNE Magazine) – EVEN AMONG Rust Belt cities devastated by the recession and the decline of heavy manufacturing, Fort Wayne, Indiana, seemed in l982 to be down on its luck. In March, a once-in-a-century flood swept the city's downtown, which in any case had pretty well fallen apart. In the fall, International Harvester, Fort Wayne's biggest employer and the company generations of Fort Wayners had counted on for permanent and well-paid employment, announced it was shutting down its truck-building operations. When winter set in, friends and relatives ferried hot coffee to those waiting in lines that curled around the block at the unemployment office. The soup kitchen run by St. Mary's Catholic Church served 1,100 meals a day -- in a city of 170,000. By February 1983, unemployment in Fort Wayne peaked at 14.5%, vs. a U.S. average of 11.3%. Since those dismal days Fort Wayne, whose metropolitan area comprises three counties with a population of 350,000, has mounted such a strong economic recovery that unemployment, now 5.7%, is 1.3 percentage points below the national average. Fort Wayne has proved that being an industrial city in the Rust Belt is not an incurable dis- ease. Other industrial Midwestern cities have barely begun their recovery (see table), and the region as a whole is only slightly better off than it was four years ago. In December, Fort Wayne will crown its job-hunting campaign when General Motors starts making pickup trucks at a new $500-million plant. The highly automated plant, GM's most modern for the moment, will employ 3,000 people, mostly workers brought in from GM sites elsewhere. Their paychecks will add fuel to the local economy, creating an estimated 3,500 additional jobs. Burlington Air Express, the second-largest air freight service in the U.S., last year made Fort Wayne its national hub. The city has also persuaded companies long established in the area, such as GE, ITT, and Magnavox, to / expand rather than cut their work forces or pull out. Instead of letting Fort Wayne lie down and die in 1982, politicians, businessmen, labor leaders, philanthropists, and many ordinary citizens responded with a single-minded drive to make the city well again. Its leaders include Ian M. Rolland, 53, president and chief executive of Lincoln National Corp. (assets: $13.5 billion), which ranks 15th on FORTUNE's list of diversified financial companies, and Richard K. Doermer, 63, president of Summit Bank (assets: $1.2 billion). Home-grown, like Lincoln National, Rolland is a contributor and activist. He led an effort to turn the moribund chamber of commerce into an aggressive, well-financed pursuer of new business. He headed a $4-million campaign to build a new art museum and is now running a $7-million campaign for the city's Fine Arts Foundation. Rolland has also pushed the local school authorities to speed up the integration of the innercity elementary schools, which remain mostly black. Doermer has hit the road and telephone in an effort to cajole companies to move to Fort Wayne or expand there. Winfield Moses Jr., a pudgy, cheerful young homebuilder with a rich mop of dark hair, became the city's chief cheerleader and salesman after he was elected mayor in l979. Says Moses: ''Essentially, we buy jobs, just as you buy any product.'' Fort Wayne buys jobs with low-interest financing, tax abatements, grants, gifts, job training, and city amenities such as those above. Other cities pitch such attractions, but Fort Wayne does it so wholeheartedly, and with such close cooperation between city officials and business, that the results are spectacular. The metropolitan area hasn't yet won back all 37,600 jobs it lost in the early 1980s, but it has regained 35,400, boosting the recent total to 180,200. That does not count new jobs in the pipeline, including those to be generated by GM. Success doesn't mean Fort Wayne has stopped hurting. St. Mary's soup kitchen now serves 1,200 meals a day. Ed Elkins, who runs the East Wayne Street Center, a private charitable group, says the city still has a ''very significant underclass'' of people who don't have the skills to learn sophisticated new manufacturing jobs. Many are blacks, the only significant minority, who make up 15% of the city's population. Some old International Harvester employees -- no one calls it by its new name, Navistar -- are still looking for work. Those who find it can rarely match the average $12.50 an hour once paid by Harvester, although GM will be paying assembly workers $13 an hour. For all the hangovers from the recession, Fort Wayne is booming. Part of the city's success is sheer luck -- the luck of being on Interstate 69 within half a day's truck drive of much of industrial America, and the luck of being in Indiana, which treats business handsomely. Indiana has generous tax abatements, minimal bureaucratic red tape, and a Republican state government that seeks new business enthusiastically, even for Fort Wayne and its Democratic mayor. Indiana also has the lowest insurance rates for worker's compensation and the lowest unemployment insurance taxes in the U.S. Fort Wayne has a well of originality and gumption to draw on to solve its problems, going back to 1885 when Sylvanus Bowser invented a device that led to the modern gas station pump. Another invention made the city the center of the production of magnetic wire used in electric motors. The late Senator Homer Capehart put his Capehart Automatic Phonograph Co. in Fort Wayne and won a patent for the jukebox in 1931. Philo Farnsworth, one of the inventors of TV and founder of a company bearing his name, acquired Capehart in 1939, and ITT bought the merged companies in 1949. In the 1930s Magnavox, headquartered in Fort Wayne but since acquired by the Dutch company Philips, coined the terms ''woofer,'' ''tweeter,'' and ''stereophonic.'' In the same decade local GE engineers developed the garbage disposal, nicknaming it the electric pig. So successful was Fort Wayne that its business leaders grew complacent about attracting new business in the 1970s. ''Our marketing skills as a community were non-existent,'' says Thomas J. Eckrich, 48, who owns and runs a real estate firm called Northill Development Corp. But even before the need became obvious, Moses was reshaping the city government to make it an instrument of economic growth. In 1981 he raised Fort Wayne's obscure office of urban grants to a cabinet-level department of economic development responsible for all the services a new company might want, such as tax abatements and financing. Even opponents admit that Moses has done well for the city. Indiana politics can get rough, and the mayor has had his battles with the Republicans who rule surrounding Allen County. But when it comes to creating jobs, they work together. In many other cities giveaways to new industry have led to grousing by companies long on the scene that get nothing. Some cities have sued to force companies to live up to their promises. Not in Fort Wayne. ''There's a lot I don't like about Moses,'' says Orvas Beers, the powerful Allen County Republican chairman, ''and he takes a lot of credit he doesn't deserve, but he's an asset.'' Beers adds slyly, ''He is a lot more popular than you'd expect after being charged with felonies.'' After Moses won reelection in 1983 by a 73% majority, his opponent charged him with failing to report a campaign expenditure, and he was indicted for felonies. After plea bargaining, he was convicted of misdemeanors and received a fine and a suspended sentence. He resigned and was immediately reappointed mayor by the town's Democratic precinct chiefs. Stewart Spencer, editor of the News-Sentinel, says the public dismisses the incident as the ''political equivalent of a speeding ticket.'' THE CITY'S business leaders were slower than Moses to see what was needed. The events of 1982 changed all that. First, an outpouring of volunteers to build sandbag dikes during the flood showed that the city still had plenty of spirit. The city's leaders woke up when they heard Harvester might leave. The company had already cut its work force sharply from a peak of 10,500 in 1979. Says Summit Bank's Doermer: ''Up to the time of the International Harvester closing, we had been wringing our hands, but that rallied us.'' At first, Fort Wayne fought to keep Harvester. Moses, now 43, slimmer and a little gray, remembers the summer of 1982 as ''120 physically excruciating days.'' Harvester had truck operations in Springfield, Ohio, and Fort Wayne, and decided to concentrate production in one of these cities. The company told Fort Wayne the state of Ohio had promised to give it $30 million. What could Fort Wayne do against the might of Ohio? Much to their own surprise, the city leaders worked out a matching $30-million package, with only $4 million from the state. Moses and others made half a dozen visits to Harvester headquarters in Chicago. But in the end, the company shut the Fort Wayne plant and laid off its remaining 2,800 workers. Even in the middle of the Harvester battle, Rolland and others began to reorganize their marketing efforts. To fire up the clubby chamber of commerce, they brought in a colorful new boss, Richard G. Clark, who somehow was able to convey optimism even as Harvester pulled out. Other organizations such as the Convention and Visitors' Bureau were brought under Clark's umbrella, concentrating the city's energies. To finance Clark's efforts, the chamber temporarily hired a successful fund-raiser from Notre Dame University, Thomas Pilot, and set out to raise $6.3 million. Exceeding its goal by 50%, the chamber gathered $9.2 million with the help of $1 million from the city, $500,000 from Rolland's Lincoln National, and another $500,000 from a local foundation. The money went for beefing up the staff of the chamber, hiring a New York public relations firm, placing ads in business magazines, and sending teams out to sell businesses on moving to the Fort Wayne area. Doermer recalls a successful visit to Appleton to help persuade Air Wisconsin to put its central maintenance facility at Baer Field, an airport jointly operated by the city and Allen County. ROLLAND AND OTHERS pushed for the creation of a Corporate Council of 40 of the top leaders in the area, including businessmen, the mayor, educators, and county officials. The council's goal is not only to attract business, but also to make the city a more attractive place. The basics were already there -- a well-run city with well-manicured parks full of flower beds; attractive, reasonably priced housing; and a peaceful atmosphere rarely spoiled by anything as rude as a car's horn. Although much of downtown Fort Wayne is still a wasteland of parking lots and boarded-up stores, the revival is well under way. In addition to a new art museum, the city has a $5-million botanical garden enclosed in three striking, angular greenhouses and a $4-million performing arts center designed by the late Louis Kahn. To demonstrate Fort Wayne's cultural awareness, city hall treats telephone callers who are put on hold to Vivaldi. To make sure the world heard about all the good things happening in Fort Wayne, Moses campaigned to win awards for the city, not out of mere boosterism but to establish its credentials as a good place to live and work. He succeeded. In 1983, for example, President Reagan presented Moses with the National Municipal League's All-America City award for Fort Wayne's innovative response to its problems. The city's first efforts to exploit these attributes and collar new business were hesitant. Moses and his staff investigated and rejected the idea of turning the area into a Midwest Silicon Valley, but not before losing $1 million in an unsecured loan to a microcomputer company in Ohio that went bankrupt before it could move to Indiana. Typically, according to his aides, Moses didn't try to pin the blame on anyone but prodded his people to refine their ideas about what the city could do best. Fort Wayne's traditional skills are in manufacturing, but Moses did not want low-technology industries. ''They were lost to Korea and Mexico,'' he says. ''So we had to concentrate on high-tech, computerized manufacturing.'' He wanted state-of-the-art plants so efficient that they would be the last to close in a recession. He also wanted plants that could ''compete on a global basis,'' as he puts it, and not lose out to Asian competition within a few years of opening their doors. Indeed, he would welcome an Asian company in Fort Wayne but has had no nibbles yet. He has visited Japan in search of business, and the chamber of commerce has hired a Japanese businessman as a consultant. The biggest monument to Ft. Wayne's success, the new GM truck plant, is about ten miles southwest of the city limits on Interstate 69. Since the plant means payrolls, suppliers, retails sales, and housing in the city as well as its suburbs, Fort Wayne fought for it as hard as if GM wanted to build within the city. James Falloon, a 46-year-old Canadian who will manage the plant, says location was the decisive factor in the choice. To accomodate just-in-time inventory controls, the plant had to be within 200 to 300 miles -- a one-day round trip for a truck -- of most suppliers. Fort Wayne met that requirement, but so did other cities. The state and the city then piled on the incentives for choosing Fort Wayne. ''The town was so positive about us we were leery,'' says Falloon. The city agreed to spend $9.5 million on water lines and sewers for the plant and sold $31 million in low-interest bonds to finance pollution controls. Allen County threw in $2.75 million for improvements to local roads. The state paid $20 million to convert the simple interchange on Interstate 69 to a full double clover to handle more traffic, and added $11 million, including $5 million for on-the-job training. The sweeteners totaled $70 million, not counting a ten- year property tax abatement that will save GM an estimated $14 million. What will the Fort Wayne area get in return for all these taxpayer- supported inducements? The plant will generate $100 million a year of spending in the area by GM employees, who will create new jobs in a kind of ''multiplier'' effect, and will pay about $3 million a year in state income taxes and $5 million in sales taxes. The imported workers will need new housing, which will swell property tax revenues. Another important catch settled at Baer Field. When California-based Burlington Northern Air Freight decided last year to establish its own jet fleet it needed a central hub where the planes could meet every night to swap loads. Three serious candidates emerged: Indianapolis, Columbus, and Fort Wayne. Any would have served well, but Moses made the best offer. The city remodeled a large building it owned at the airport and leased it to the company, which has just changed its name to Burlington Air Express. Formerly owned by Burlington Northern Railroad, it is now a subsidiary of Pittston Co. The city, with federal help, is lengthening the runways and has promised further improvements. Residents complain about the noise at night, but the city isn't about to silence a business that is investing $100 million in the area and employing 350 people. FORT WAYNE has also fought successfully to retain established industries that might have moved. General Electric, a longtime resident, cut its work force from 10,000 in the l960s to 2,900. Some 550 workers were scheduled to be laid off in 1984 and 1985. However, a GE plant in Cincinnati needed more space for its fast-growing jet engine business. Fort Wayne lured part of this high- tech operation, the manufacture of electronic controls, with a variety of attractions, including tax abatements and helpin retraining workers. Instead of cutting jobs, GE wound up with a net gain of 150. Other veteran Fort Wayne employers have been expanding. When ITT won a contract to develop the Army's new family of tactical field radios, it had a lot of empty plants around the country it could have used, but Fort Wayne came up with another irresistible proposition. A nonprofit city corporation built a $4-million plant for ITT in a new industrial park and made it available to ITT for a nominal $1,000-a-year rent for five years. ITT has doubled its Fort Wayne employment in three years to 1,300 and plans to double it again in the next three. Says Karl Bandemer, a builder who was the city's director of economic development until recently: ''We hit a home run with ITT.'' The city's biggest employer, Magnavox, chose to spread out mostly in the Fort Wayne area as its military electronics business grew. Other states offered inducements, says President James R. Loomis, but couldn't match the skilled and willing labor available in Indiana. ''The work ethic of the people coming off the farms is absolutely unbelievable,'' says Loomis. Magnavox employment in the area has grown from 3,000 in 1979 to 7,100 today. The renewed vitality of manufacturing has given a great boost to local industries, especially housing, which almost came to a stop in the early 1980s. Thomas L. Guthrie, director of the Community Research Institute at the combined Fort Wayne campus of Indiana University-Purdue University, says single-family housing permits will probably total 2,300 this year, compared with the previous high of 2,000 in 1978. ''The market is going wild,'' he says. Like other developers, Joe Zehr, 45, barely survived the bad years. He took up strip mining in southern Indiana and erected condominiums in Dallas while trying to carry 500 unsold lots in the Fort Wayne area. Business began to pick up as early as 1983, and now Zehr has $35 million of work on the books. Time will tell whether the benefits of luring industry to Fort Wayne truly match the costs. At first, the city was so far down it had to grab what it could, and hang the expense. ''There are too many communities chasing too few industries,'' says Karl Bandemer. ''It's crazy. But it's the game. You have to pay to play.'' Fort Wayne is playing, paying, and winning. Now that the crisis has eased, says Moses, ''we're filling in jobs more selectively, and moving away from giveaways.'' Fort Wayne can now take a more hard-nosed look at which companies come to town, and how much they will cost.

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