WARMING TO SUCCESS

By NANCY GIBBS

In the middle of the best economy in more than two decades, people in Chillicothe, Ohio, can see the fireworks but can't hear the boom. Prosperity is not a parade through the center of town; it has arrived so quietly, by modem and by minivan, that people here don't trust what they see.

They're buying better cuts of meat, says the butcher, but driving an extra 100 miles to get a better car deal; saving money on toilet paper at Wal-Mart--"I never did that in the '80s," says a local businessman--so they have extra to spend on a better breed of golf club. The deli owner was confident enough to start her own business, but is worried enough that she doesn't yet dare raise the price of a liverwurst above $3.50. The local bankers see people with as much as $70,000 in charge-card debt, which could be a measure of people's confidence in their future prosperity--or a resignation that they'll never climb out of debt, so why not dig the hole a little deeper?

Chillicothe, where Indian traders swarmed 11,000 years ago, sits where the rivers and railroads connect it easily to the rest of the U.S. economy, and so it has usually mirrored the country's fortunes. Right now that reflection is beguiling: new construction in Ross County has quadrupled in the past seven years; the average home, which sold for $49,700 in 1989, now sells for $84,200. The pretty downtown brick buildings, hollowed and haunted in the '80s, are being turned into stores with condo apartments on top. "In 1990 I don't remember one ribbon cutting for a new business," says David Milliken, president of the Chillicothe-Ross Chamber of Commerce. "Lately we've had about one every month."

Yet the mood in town (pop. 22,176) holds as much superstition as celebration. Stuart Orem manages the 142,000-sq.-ft. Wal-Mart on the city's vast, booming commercial strip, built 18 months ago on what was once a lovely cornfield. His office is lined with computers that every day spit out new evidence about a windfall he doesn't quite believe in. "I don't think it's hit this area yet," he says of the economic boom, one day after his sales of patio furniture jumped 100% over the same day last year. The next morning, Charles and Shirley Warner come in to buy their grandchild a swing set and walk out with $476 worth of green wrought-iron furniture. "I don't do this much, but my work is good," says Charles, who toils nearby at the huge Mead Fine Paper plant. In March, Orem sold every bag of Easter candy he ordered. That wasn't supposed to happen. Since then, flowers are up 15%; shoes up 25%; even men's clothing, usually a dog, is way up. Orem can't keep enough shotguns and rifles in stock. Though he carries five sizes of air conditioner, the only one that's moving is the largest and most expensive--the 12,000-BTU model. Curtains and bedding are up 20%, a trend that tips him off. "When the economy picks up, people are going to start updating the inside of their home," he says. "I know. My wife's killing me on that."

The most successful businesses are the ones that can read the new economy and exploit its moods. There are fortunes to be made, for instance, by recognizing the potential of fish as furniture. Fish have become a perfect pet for the 1990s, where no one's around much but everyone wants his house to be all the homier anyway. So aquarium sales are through the roof. That is good news at Petland, a Chillicothe-based company whose success is nurtured as much by the weaknesses of America's two-income economy as by its strengths. Thirty years ago, Ed Kunzelman was a Chillicothe schoolteacher who started a pet shop on Paint Street with a $1,600 loan from the teachers' credit union. Last year his company did $100 million in sales, with 152 franchises worldwide. Jim Whitman, the executive vice president in charge of recruiting franchisers, finds his best clients are refugees of the old order: the middle-aged managers and blue-collar workers laid off by corporations obsessed with efficiency. He scoops them up (as long as they "love pets and like people--in that order") and turns them into managers of pet and pet-product stores. He's convinced that his business is perfectly timed. "People are getting back to basics, doing something real," he says. "There is something grounding in spending your money to buy a family dog."

For the big industrial manufacturers that ring Ross County, the challenge is to convert the old economy to the new, which often means better profits but less hiring. National City Bank of Columbus surveyed 50 companies in the county and found that they projected $165 million in investment over the next three years but a net loss in new jobs. Workers who can't keep up with changing technology are finding fewer and fewer plants that will hire them: they don't want the $5.50-an-hour jobs, but they don't have the skills for the $12-an-hour ones. Richard Rahrle is one who made the adjustment. He has worked at the Mead paper plant since 1963; the original control room where he worked, which mixed the pulp and dyes and other ingredients that go into the paper, became obsolete once the new computers arrived in 1993 and did it faster and better. "I'd never touched a computer in my life," Rahrle says, as he sits and starts clicking through the intricate processes that control the huge old papermaking machines. But he had a choice. "It was either learn to use it or go to the back of the line."

Mead's 800-acre Fine Paper plant is the city's largest employer, with 2,500 workers. One day last year the plant ran an ad for extra crew members; 10,000 people applied for about 50 slots. That's because the jobs are secure, the benefits good and the starting wages well above the area's average of about $6.50 an hour.

The state of the local job market captures all the contradictions of the current boom. For every employer complaining that he can't find workers, there's another worried that he can't keep them. Local schools, employers complain, aren't turning out competitive graduates. Wal-Mart's Orem is 32 workers short of the 289 he needs because, he says, he can't find people willing to work hard enough. "It's a tough economy for us, because there are more jobs than good people," says Jeff Streitenberger, a partner in Personnel Solutions, the largest employment agency in Chillicothe. "I could place half again as many workers every week if I could just find qualified, appropriate applicants." By that they mean those willing to commit to a job in an economy that so often in the past has not been willing to commit to them. The ruthlessness of companies is now turning against them. The manager at the Kroger supermarket started offering employees a $100 bonus if they would just stay three months. "They'll quit a good job with benefits if somebody offers them 50 cents more," says Streitenberger. "They come in and tell me how much they want to make. And I'm sitting here looking at a high school graduate with no experience who is telling me he wants to make $20 an hour."

City officials have ambitious plans to bring in those better-paying jobs. They're planning a center to house software companies they would lure with an "incubator" incentive package, including one year of free access to ISDN lines, low-rent offices in the neighborhood of $30 to $40 a month and free technical advice. The goal is to attract high-tech businesses like the one that recently moved in downtown, Integrated Technology Group, which makes software for robotic controls. Gus Comstock, the city's economic development director, sees this as the right kind of business for the future. It is high paying, clean, and does not tax the local infrastructure. "You don't need mammoth loading docks," says Comstock. "You can get $1 million in software in the back of a van."

--With reporting by Janice Castro, Adam Cohen, Michael Duffy, James L. Graff and Barrett Seaman/Chillicothe

With reporting by JANICE CASTRO, ADAM COHEN, MICHAEL DUFFY, JAMES L. GRAFF AND BARRETT SEAMAN/CHILLICOTHE