PLAN OF ATTACK: Anderson’s leaders are working to exorcise the ghosts of GM

Four miles and decades of history separate the Anderson exits along Interstate 69 northeast of Indianapolis.

Empty General Motors Corp. plants-as much a thing of the past as single-class basketball-cast ominous shadows at Exit 26, once Anderson’s front door.

To the west, closer to Indianapolis, is Exit 22 and the trappings of the future: millions of dollars in new infrastructure, a new business park, and the state’s largest business incubator-tools Anderson officials think they need to turn this rust-belt poster child into a well-oiled economic machine.

“It’s high time we start looking at things differently,” said Mayor Kevin S. Smith, a longtime Anderson police detective who took office in January 2004. “The past is gone, and it’s not coming back. We need an economic development plan that reflects that.”

That’s a painful admission for a city that has depended on a single employer for as long as most of its residents can remember. It’s also a bold statement for a Republican mayor still trying to win voters’ confidence following four-term Democratic Mayor J. Mark Lawler.

Patrick Barkey, an economist and Ball State University professor, said Smith faces a tall task but is on the right track.

“The first thing elected leaders need to do is torpedo complacency,” said Barkey, a former resident of Flint, Mich., whose economy-like Anderson’s-thrived for decades on the oil that courses through the automotive industry.

“Local leaders have to prepare the city for growth, and to longtime residents, some of those initiatives will look very unusual,” Barkey said.

While planting seeds for a new economy is as alien to Anderson residents as recruiting a Toyota plant, Smith says he’s ready to do just that. He’s already knocked on Toyota’s door-and Honda’s, too.

Change agent

Smith hasn’t shied away from controversy.

While cutting the city budget $4 million since taking office, he’s added a position to market the city to outside companies. He’s allocated an additional $2 million for road, sidewalk and sewer improvements and beautification projects. The mayor said that type of investment will continue even without agreements from companies willing to locate in the areas being improved. The city, Smith said, needs a makeover if it’s going to lure outside investment.

It can no longer afford to wait for companies to come calling. In the last 20 years, Anderson’s population has plummeted from near 72,000 to less than 60,000. In the same time, the city has seen $10 billion in annual wages evaporate along with $156 million in annual tax revenue and $430 billion in annual industrial output.

GM’s work force has dwindled from 24,000 three decades ago to a single employee who watches over the Detroitbased automaker’s vacant lots and buildings.

“It’s been a slow, painful death in Anderson, and that can make the transition to a new economy more difficult,” Barkey said. “People want to hang onto something until it’s gone. Well, now it’s gone.”

Despite the decline of high-wage jobs, Anderson hasn’t completely collapsed. Service jobs have sprung up in the medical field and other sectors, keeping the city’s unemployment rate below 5.5 percent, a far cry from the 20-percent levels that plagued it in the early 1980s during the recession that marked the first big steps in GM’s pullout.

Those service jobs, though, don’t replace $26-an-hour GM union jobs.

Entry/Exit strategy

Symbolic of Anderson’s problems is its comprehensive development plan, which hadn’t seen significant change since 1962. Now, it’s being reworked and will address, among other things, the city’s I-69 access points.

Scatterfield Road leading from Exit 26 to the city’s center along the White River is littered with reminders of a time when GM employed half of all working Anderson adults. The road was once lined with GM plants and the businesses that served them.

Smith has initiated discussions with GM to take over the abandoned land and buildings. But the city isn’t eager to acquire those sites-even at no charge-until replacement businesses have committed to locate there.

Keeping the empty factories in GM’s possession keeps the property taxes rolling in, and gives the city time to make sure the automaker takes responsibility for cleaning up any environmental problems that remain.

Meanwhile, much of the city’s attention has turned to Exit 22, four miles west. The exit, which sat dormant for years, leads to Martin Luther King Jr. Boulevard-also known as Business State Road 9. Its lone business, a gas station, closed long ago and the street was mostly ignored throughout GM’s reign.

Now it’s touted as Anderson’s new front door, and the focal point of the city’s revival.

“Exit 22 is closer to Indianapolis and the fast-growing Hamilton County area, and we think we can feed off that,” Smith said.

Near the exit is the Flagship Enterprise Center, a business incubator that opened in May as part of the surrounding Flagship Enterprise Park, a 200-acre complex already home to a dozen stand-alone facilities that house firms in the transportation, engineering and medical fields.

Almost 20 startups have moved into the center, the state’s largest incubator in terms of square footage. Agreements with Anderson and Purdue universities are fueling expansion at the facility and optimism among local officials that it will become one of the Midwest’s premier incubators.

The Anderson University Falls School of Business and Purdue’s technologyrelated departments will offer degree programs at an adjoining facility to be built by summer 2007. The schools will make a variety of internships available at the incubator and school officials said faculty will work on research and development with companies there.

Pete Bitar, president of Xtreme Alternative Defense Systems, is among those who’ve moved their companies into the center.

“Anderson is a diamond in the rough,” Bitar said. “With its central location, proximity to Indianapolis, and access to a variety of technical expertise, Anderson is an ideal place for us to grow.”

GM’s glow

Though GM has had almost no presence in Anderson since the late 1990s, some of its positive influence remains.

The much-ballyhooed incubator was launched through a $3 million GM gift.

And Smith noted there’s another important GM byproduct remaining: many of the people the company nourished professionally.

“People will see we have a pool of labor that fits almost any need,” Smith said. “We have a lot of people in this area with engineering and technical backgrounds whose expertise is unparalleled.”

Smith said many former GM employees have taken buyout packages or retired, but have remained in the area as either entrepreneurs or consultants.

And Anderson has another economicdevelopment advantage. Because the city owns its own power and light facility, it was able to put in a fiber-optic network unmatched in the area, Smith said. The mayor finished what Lawler, his predecessor, started by installing enough fiber optics to serve all comers.

The city has also employed almost every kind of tax incentive there is to draw new business, including becoming one of the first Indiana communities to kill the inventory tax and launch a duty-free foreign trade zone. State and federal tax incentives are also in place to help fill the brick-andmortar behemoths GM left behind.

GM’s shadow

City leaders admit the vacant facilities, while offering hope for the city’s future, continue to be a painful reminder of Anderson’s past.

“No one for 20 years has thought we were going back to an automotive industry here. But there are a lot of reminders of that era,” said Mary Starkey, executive director of Madison County’s Corporation for Economic Development.

Among the reminders are the vestiges of GM-related businesses like spin-offs Delphi Automotive, Guide Corp. and Remy International. Collectively, Delphi, Guide and Remy still employ thousands, but jobs at some of those plants are far from secure.

Anderson City Councilor Joseph Newman, who recently retired from Delphi after nearly 40 years, knows firsthand what the city has been through and what it faces. Delphi still employs almost 900 in Anderson, but declared bankruptcy in October, jeopardizing local jobs and another 5,500 in Kokomo.

“We have to forget about what’s falling apart, and move forward with building a new future,” Newman said. “But, believe me, I know, sometimes it’s difficult to watch these companies struggle. They represent the livelihood of a lot of people, and a lot of my friends.”

Newman’s district southwest of downtown-where his family has lived since 1918-is littered with dilapidated houses and vacant lots.

But Newman said the mayor and City Council have worked hard to rehab neighborhoods.

“We’ve seen more than a dozen homes rehabbed here and others are being rebuilt,” Newman said.

Run-down homes are just one housing problem Anderson faces. A lack of upscale homes could send executives of newly located companies to Hamilton and northern Marion counties for housing that suits their lifestyle.

Country Club Heights, surrounding the Anderson Country Club, offers high-end housing, as does a new waterfront development about two miles northeast of downtown. City officials think one or more upscale developments will crop up near the Exit 22 corridor once road improvements are complete.

Attracting business is job one, Smith said, but seeing that the people who run those businesses call the community home is a close second. Executive brainpower is something every successful community needs to spearhead civic projects and stock government boards, he said.

Image is everything

Anderson’s civic life used to revolve around a factory and a high school gymnasium, but no more.

No longer do city officials tout Anderson High School’s Wigwam-a cathedral to Hoosier Hysteria’s glory days-as a major attraction. Instead, they trumpet pacts with area colleges to bring in a steady stream of brainpower to fuel the economy, along with new, state-of-the-art school buildings and classroom facilities.

After spending the first two years of his administration preparing the infrastructure to attract businesses, those are the images Smith tries to sell.

He admits the city’s perception as a GM town has hampered statewide recruitment efforts, but he’s taking Anderson’s message to a bigger stage. The mayor hired economic development and marketing expert Greg Winkler last year, for $9,000 a month plus up to $3,000 a month in expenses, to sell Anderson not only regionally, but also nationally and internationally.

Winkler, 44, worked in the Church of God ministry before pursuing a master’s of planning from the College of Architecture at Ball State University. For 15 years, he worked in sales for engineering and facilities companies. Smith said Winkler’s private-sector contacts will be key in selling Anderson.

The duo traveled with Gov. Mitch Daniels and a cadre of state officials to Asia in July and they’re making a recruitment trip to Israel Nov. 6-12.

The mayor is working on three prospects drummed up on the Asian trip. If they pan out, more jobs will be added to the 400-plus gained since Smith took office.

Politics aside

Despite the valiant effort to remake Anderson, there’s a mountain of misperception to overcome and a daunting divide to bridge between the city and prospective companies.

A turnaround, said Flagship Enterprise Center CEO Charles Staley, will take a Herculean effort framed by cooperation.

“We simply don’t have time here for politics as usual,” said Staley, whose mother was secretary for the local branch of the United Auto Workers. “We need a unified front. That’s what our citizens expect, and I think that’s what both parties will deliver.”

The city seems to be pulling together in Smith’s first term, despite long odds. Republican Smith is married to a City Council where Democrats hold a 5-4 edge.

“Sure, there are differences, but I haven’t met a politician yet who’s against economic development, job creation and improving the way of life for residents,” Smith said. “These are fundamental issues which demand all of our attention.”

Councilor Newman, a Democrat, gives the mayor and council members a “high B” for their cooperative effort thus far.

“We have some difficult issues in front of us,” Newman said. “But regardless of party, I think people realize economic development is a community project.”