Wooing the Plants

As Research Officer Herbert Kinney of the Atomic Energy Commission drove down the gaily decorated main street of Haverhill, Mass., not long ago an uneasy thought struck him. "I have a terrible feeling," he said to an aide "that all these flags are for us."

They were--and so was a lunch with 400 civic boosters. Their aim: to make Haverhill the site of a $375 million AEC atom-smashing accelerator and so gain 2,000 new jobs, 10,000 new residents and a $16 million-a-year payroll. Haverhill, one among 148 locations considered by AEC, is no longer in the running, but six other communities, from Sacramento, Calif., to Brookhaven, N.Y., are still battling for that plum with offers of free land, improved schools, and even tax-subsidized power expansion. Their skirmishing is part of an increasingly competitive struggle among states and cities for new factories.

Full Time. According to one recent estimate, no fewer than 20,000 organizations and 100,000 people--25% more than a year ago--now devote full time to seeking a share of U.S. industry's $60 billion-a-year investment in new plants. The hunters not only outnumber the prospects but are growing adept at raiding each other's territory for corporate game, often with the state's Governor leading the foray. Governor John McKeithen and a 17-man team of Louisiana bigwigs recently visited Pennsylvania for a fast sales pitch to 139 firms. Governor William Scranton, having enlisted 130,000 businessmen in a group to tout Pennsylvania, has ventured to such places as Detroit, Toronto and San Francisco.

Modern transportation, cheaper power and an auto-borne labor force have largely freed industry from its old need for locations close to mines, markets or seaports. However it strikes consumers Massachusetts' new sales tax is helping the state to win back industry because it holds the promise of lower property taxes. Illinois has taken to needling New York City (see cut). Said one recent ad: "We figure New York will probably have a typhoon next week," and it goes on to say, "Typhoons hardly ever happen north of Pago Pago, but the way your luck has been running it wouldn't surprise us if it happened to youknowwho. First your water dries up. Your lights conk out. No newspapers, no subways. So why not a tropical storm? Or maybe your sewer system will back up and you'll be riding to work on alligators. We don't have any black outs or water shortages or subway strikes. Matter of fact, our commuter trains are seldom even late."

Overriding Concern. Congested New York has been losing 17,000 industrial jobs a year. Reversing that trend has become Mayor John Lindsay's overriding concern. "It's a battle we must win," he says. "If we lose, we lose everything." In its desperation, New York has set up a Public Development Corporation, headed by General Lucius Clay, to tempt industry by assembling sites. Adopting a controversial scheme that began in the South, the corporation also plans to finance some plants with tax-exempt bonds.

Because the owners pay no federal income tax on the earnings of their investment, such industrial bonds carry comparativly low interest rates. Thirty states now authorize industrial bonds. From a mere $47 million in 1960, the volume of tax-free industrial financing swelled to $439 million in the first nine months of this year. That deprives the U.S. Treasury of at least $20 million a year in tax revenue and has prompted critics to condemn the practice as a misuse of public credit.

Last month criticism on Wall Street persuaded tiny Jerome, Ark. (voting population: 35), to defer a $20 million issue that would have provided the plant and working capital for a new knitting mill. Amid today's stiffening competition among cities, such setbacks are rare. Some towns pledge to repay industrial-bond borrowings through their taxes, even though the company involved may fail. Deming, N. Mex., goes even further. It not only provided the plants for two tool companies, a toy factory and a producer of oil-well test gear, but also owns the businesses. As a result, the local government has become the town's No. 1 employer.

This file is automatically generated by a robot program, so reader's discretion is required.