THE GRIM REAPER

...No one picked up on that immediately," Shere recalled, but toward the end of the meeting one member of the Springfield delegation asked whether Harvester would object if the group looked into the purchase-leaseback idea...

...Otherwise there is no end to the blackmail...

...Leopold cites Sweden's industrial policy as an example the United States could follow...

...In the absence of the massive intervention Leopold recommends, the Federal Government could at least eliminate the incentives that spur companies to move from one place to another, says Barry Bluestone, professor of economics at Boston College and co-author of The Deindustrialization of America...

...The only real victor was International Harvester...

...At the community level, there may be fewer options...

...The squeeze began with a telephone call from Washington, D.C., to Springfield in January 1982...

...The organizers investigated Vaca-ville's offer and discovered it possibly violated California law...

...Asked to explain the company's role in the competition, Harvester spokesman Bill Greenhill alluded to the company's shaky financial situation and said: "We were doing many things at that time, but the name of the game was cash...

...When the Plant Closures Project and the UE, which represents the employees of Simpson Dura-Vent, got wind of the company's plans, they swung into action against the move...

...Things could continue until workers at both plants were making minimum wage and [Harvester] would still have to make a decision on which plant to close," Rex Bear, president of Fort Wayne UAW Local 57, told the Fort Wayne Journal-Gazette...

...What was needed, Lennox stated, were "special efforts of the state and local community to assist us...

...Local businesses pledged discounts for Harvester and its employees worth an additional $2 million...

...In Sweden, they don't allow bidding contests...

...In September, Mayor Moses again traveled to Chicago, promising Harvester officials another $8 million to modernize its plant...

...Throughout the ordeal, Springfield officials maintained that they were not bailing out Harvester but acquiring one of its plants...

...We could have killed the whole plan, which would have cost tens of millions of dollars," Shapira says...

...Some unique ideas have been suggested in Ohio, including a sale-leaseback proposal for the Springfield plant," Lennox continued, quickly adding that the company was "ready to discuss any Indiana proposals as well...

...In Springfield, too, uncertainty about job stability was eating away at Harvester workers...

...We went to a lot of time and expense and travel to meet a deadline to find out the deadline does not mean much," complained Mark Akers of the Indiana Commerce Department...

...After Harvester's announcement, the two communities intensified their efforts to woo the company...

...But Springfield's technological advantage was so great that unless Fort Wayne came up with an enormous sum of money and Springfield came up with none, Harvester would in all likelihood have chosen Springfield...

...But he also said Harvester might keep both open if operating costs were "dramatically altered...

...I'm not sure there's a short-run solution...

...The lesson is that things can be won...

...The Ohio public was told it had won a great victory on the battlefield of economic development...

...Bluestone agrees: "Unions can't allow one local to bargain against another...

...The United Auto Workers, representing Harvester workers nationwide, agreed in May 1982 to grant an estimated $200 million in concessions to the company...

...The city also accepted responsibility for assisting workers displaced from the original plant and adopted a strict affirmative-action policy...

...For his part, Bear said he would "resist any effort that could turn into a bidding war between the Fort Wayne and Springfield UAW locals...

...The target of the drive was Simpson Dura-Vent, which employed about 200 workers in Redwood City, near San Francisco, in a plant that produced chimney pipes...

...We realized because of International Harvester's cash needs that we had to complete the purchase-lease-back to neutralize Fort Wayne's massive community effort," Shere later explained...

...And that's one of the reasons they have 2 per cent unemployment...

...It's going to take a truce beginning with the state governors," he says...

...To pare costs even further, it played Springfield off against Fort Wayne...

...But there is some cause for hope...

...The question "pushed the right button," reported Shere, and Lennox replied that Harvester would be "very interested" in seeing such a plan...

...The new agreement would cost the average union member at Harvester about $3,000 over a two-and-a-half-year period, and would result in the loss of some holidays, vacation time, and pre-retirement leave...

...This is a story of corporate arm-twisting, an increasingly common exercise that is jeopardizing the power of labor unions to protect their members and undermining the ability of localities to govern their economies...

...So the Plant Closures Project and the UE filed suit against the city, jeopardizing Vacaville's entire redevelopment project...

...Four months later, in late July, Harvester announced it would definitely close one of its truck plants—though which one was still a mystery...

...The Grim Reaper How International Harvester held two towns hostage BY FRED KNAPP All across Springfield, Ohio, drivers leaned on their horns to celebrate the announcement that International Harvester, the city's largest employer, would not shut down its truck plant...

...U Avoiding the Whipsaw How can destructive bidding wars-such as the one between Springfield, Ohio, and Fort Wayne, Indiana-be averted...

...Even if the company managed to repay the money, by no means a certainty, the loan would still cost the public $14 million in foregone interest...

...We sincerely did not intend to get this into a bidding war," said Lennox, who by the time of the agreement had become president of International Harvester...

...A civic group called Fort Wayne Future, Inc., worried that Springfield held an advantage, began encouraging Harvester workers to take voluntary "wage deferrals...

...They determine where capital should flow...

...It was September 27,1982, and Springfield had just beaten out Fort Wayne, Indiana, in a dramatic bidding war that pitted city against city, worker against worker, taxpayer against taxpayer...

...Ohio Governor James Rhodes, supporting the position of Ohio banks, persuaded state lawmakers to raise Ohio's backing to the legal maximum of 90 per cent of the purchase price for the Harvester plant...

...In the long-run, communities would do better to operate the companies on their own, rather than take the dependent position of wining, dining, and bribing the private entrepreneur," says Staughton Lynd, a legal services attorney in Youngstown, Ohio, who has organized campaigns against plant closings in the steel industry...

...There really is only one solution, and that is some form of national capital control," says Les Leopold, a coordinator of the New York-based Institute for Labor Education and Research...

...The Congressman urged Shere to "consider figuring out a way to offset what appears to be a Fort Wayne advantage at this point...

...The stress was "causing depression, exhaustion, and general disturbance throughout the community," the director of Springfield-area mental health services told the newspaper...

...It had already laid off thousands of workers worldwide, cut salaries, skipped dividend payments, and suffered losses of $635 million during 1981...

...As a result of the competition, Harvester succeeded in frightening Springfield into offering more money than necessary to keep the company in town...

...They could get together and put a freeze on all interstate bidding...

...Representative Clarence J. Brown, whose Congressional district includes Springfield, was ringing Dennis Shere, Springfield publisher and chairman of the Springfield Chamber of Commerce's industrial development committee...

...of most American communities, were concerned about preserving existing jobs and attracting new ones...

...International Harvester, the Fortune 500 descendant of Cyrus McCormick's mechanical reaper company, was in deep financial trouble...

...You can't plan for anything," one Harvester employee told the Springfield News-Sun...

...The Springfield plant, which opened in 1966, was much more efficient than the 1923-vintage factory in Fort Wayne...

...The two Middle Western cities had something else in common: International Harvester...

...In Fort Wayne, political and business leaders hashed out details of an incentive offer, rallies were held, and more than 100,000 residents signed form letters asking Harvester to stay...

...Ohio taxpayers sank $9 million into the company's treasury in the form of a subsidized loan and assumed responsibility for another $ 16 million in loan guarantees...

...Under this plan, part of every participating worker's paycheck would be deducted as an unsecured loan to Harvester, refundable after several years—if money were available...

...You can't take a trip or buy a car because you don't know if you should spend the money...

...Barring a complete collapse of the economy, Springfield and Fort Wayne will remain viable," one official was quoted as saying...

...Now, more than a year after the bidding war came to a close, it appears that International Harvester had always intended to stay in Springfield, but used the specter of competition between Fort Wayne and Springfield to further its own ends...

...Last summer, a coalition of community activists and members of the United Electrical Workers (UE) succeeded in persuading one California city to stop luring companies from another California city...

...Before the ink was dry on the contract, Harvester workers in Fort Wayne and Springfield were being asked to give up still more...

...I think the only hope Fort Wayne had was that the Springfield package would fall apart...

...A week later, the company announced it would, indeed, move to Springfield...

...Harvester thanked the city for the offers, but remained noncommittal...

...Ironically, if neither town had offered the company a cent, Harvester would probably have kept its Springfield plant open...

...There was "no way" that Harvester's plant in Chatham, Ontario, the company's only other truck factory in North America, could have handled all of Springfield's and Fort Wayne's production, Greenhill said almost a year after the bidding war ended...

...Unions, too, can take steps to forestall a bidding war...

...We need restrictions on these incentives in order to stop bidding wars...

...A year after Harvester announced its decision, there were 1,400 new jobs in Springfield that would probably have come without a subsidy...

...Still in suspense, Fort Wayne made one last push to persuade Harvester not to close up shop...

...The company's decision saved more than 2,000 jobs and offered the promise of 1,700 more...

...Shere recruited a delegation of Springfield business and political leaders to meet with Harvester officials in late January...

...The letters were delivered to Harvester's headquarters in sandbags, intended to remind the company of the fighting spirit Fort Wayne had shown in battling a flood earlier in the year...

...In other words, the company's plans effectively required it to keep building trucks in one of the two U.S...

...I think it was clear all along, at least to the company internally, that if the packages were the same, Springfield would have been selected," said Roger Bartholow, Harvester's Fort Wayne personnel director, in a June 1983 interview...

...The Indiana politicians had met the August deadline set by the company, but still Harvester hedged its bets...

...Lennox hinted in the telegram that the company might shut down one of its truck factories...

...Pyrrhus might have had something similar in mind when he said, some 2,000 years ago, "Another such victory and we are dead...

...That's why, though Fort Wayne made the first offer, and though its final offer was millions more than Springfield's, Harvester still rejected the bid...

...States are given wide latitude to draw businesses with tax deductions and industrial revenue bonds...

...The unemployment rate hovered around 14 per cent in Springfield and 13 per cent in Fort Wayne...

...By mid-August, while Springfield was still hammering out its offer, Indiana Governor Robert Orr and Fort Wayne Mayor Winfield Moses traveled to Harvester's Chicago headquarters and formally offered the corporation $31 million in public and private funds...

...The giant manufacturer of farm and construction equipment operated truck factories employing about 2,000 workers in each community...

...Soon thereafter, Springfield came up with a winning bid: a $28 million purchase-leaseback arrangement...

...This gave Springfield a tremendous technological edge: It was worth $ 1 million a month to International Harvester, a company official revealed months after the shut-down decision...

...The company had an eye on an offer of $2.5 million in tax-exempt financing from the Vacaville Redevelopment Agency...

...It's an important precedent," says Philip Shapira of the Oakland-based Plant Closures Project, one of the groups that led the effort...

...Nevertheless, the effect was to offer Harvester large sums of money...

...At that meeting, Shere later reported, company executive Donald Lennox floated "the possibility of a purchase-leaseback" in which Springfield would pay Harvester for its plant, then lease it back to the company for continued operation...

...We put tremendous pressure on the city of Vacaville," says Shapira...

...It also stipulated that any company that moves to the city and receives financial assistance must first provide a one-year plant-closing notification to the employees at the original factory and must then recognize the union that represented employees in the place of origin...

...We're trying to have the community set conditions on the kinds of companies that come here," says Shapira...

...But other workers were getting desperate...

...In response to the Fort Wayne Future campaign, more than 800 Fort Wayne workers offered to grant steeper concessions to the company...

...Matthew Rothschild (Matthew Rothschild is an associate editor of The Progressive...

...Brown called with a sobering message...

...And in Fort Wayne, there were about 1,700 fewer jobs as that truck plant was in the final stages of closing down...

...Shere's papers had reported rumors that Harvester was planning to close one of its truck factories, but company officials had denied them...

...Lennox made Harvester's request for subsidies explicit two months later in an extraordinary telegram, dated March 30, which he sent simultaneously to the mayors of Springfield and Fort Wayne and the governors of Ohio and Indiana...

...We do not toy with people's emotions or try to play them for another dollar...

...His contacts in International Harvester had warned him that "people in Fort Wayne" were pushing hard for the company to consolidate its truck production there...

...If we go down $2 an hour, Springfield would go down $3...

...In the summer of 1982, residents of Springfield and Fort Wayne, like residents Fred Knapp is a free-lance writer in Granville, Ohio...

...The decision will be made in a board room by bankers, not [by] a bunch of letters," said Larry Krukewitt, coordinator of Springfield's efforts...

...In Springfield, the campaign was less public...

...cities—whether or not the public chipped in with millions of dollars of subsidies...

...To settle the lawsuit, Vacaville adopted an ordinance agreeing to some extraordinary conditions: It withdrew its offer of tax incentives and bonds to Simpson Dura-Vent and established a policy of not engaging in bidding wars with other California cities...

...There ought to be certain standard union policies about the extent of wage concessions that any one local can give to any one company," says David Gordon, co-author of Beyond the Waste Land...

...And the states themselves could limit business raids by their neighbors, Blue-stone suggests...

...Springfield and Fort Wayne rushed to work out incentives for the company...

...Last January, the company decided to move to Vacaville, some eighty miles to the north...