ECONOMY: Creating Wealth without Harming Natural Systems
or Human Beings
Traditional ManufacturingThe Illinois-side of the Calumet region has paid heavily for its past dependence on manufacturing, as shown in Table I below.
Table I
Differences in Job Losses in
Parts of the Southern Lake Michigan Region
(Percent Change 1972-1985)
| Lake Calumet Area | City of Chicago | Metro Area | Total Cook County |
| -36.3% | -14.0% | +0.7% | +10.0% |
Source: Airport Study of the Lake Calumet Area, Chapter II, Existing Conditions, p. II-6, From Where Workers Work in the Chicago Metro Area, December 1987.
The Indiana side of the Calumet region has also faced big job losses. Manufacturing employment in Northwest Indiana fell from over 105,000 to about 70,000 between 1980 and 1990. Service employment grew from about 45,000 to about 65,000. Thus, there was a net loss across these two sectors of 15,000.7
There are troubling legacies of the massive industrial development, waste disposal, and job losses which have occurred in the Calumet region in the past few decades. One is the inaccurate perception that all property in the region is contaminated. The region has a poor image. Another is the significant number of local institutions have little stake in the region's image or renewal.
There are few corporate headquarters in Northwest Indiana or Southeast Chicago. Many companies are not very involved in renewal of the region, although a growing number in Northwest Indiana are actively participating in the region-building efforts of the Northwest Indiana Forum. Few of the senior executives at companies live in the region. Among the steel companies in Southeast Chicago or Northwest Indiana, none are headquartered in the region. However, U.S. Steel, Inland Steel and Bethlehem Steel have their flagship plants in Northwest Indiana. While NIPSCO is very active in economic development in Northwest Indiana, there is little to attract ComEd's attention to Southeast Chicago.
In Southeast Chicago, there are no "heavy hitters" to push a revitalization agenda. Those who are pushing it are great, but don't have a lot of power. There are mostly branch plants on the Illinois side of the region, and high turnover of plant managers. Plant managers are not at risk except to get their jobs done. There are also a number of large quasi-public land owners which don't have revitalization as part of their mission. Many businesses and quasi-public authorities are primarily interested in preserving options for future land use.
Nearby labor supply is not so important to Calumet firms anymore, and is not a selling point for new plants. There also is not much economic synergy to locating near steel mills (transportation costs are a small share of total costs). Companies are also wary of the strength of labor unions in the region. Some feel that stimulating job development through tax rates, city services or cutting bureaucracy is not a major focus for the City of Chicago.
There are a few very large property owners, such as USX, Navistar, International Port Authority, Ashley Capital, and REIT's such as First Industrial and CenterPoint. This invests a few organizations with a big say in the region's future.
Finally, economic development typically occurs on an ad hoc, uncoordinated or parcel-by-parcel basis. And ecological concerns are rarely factored into economic development decisions, even though natural assets on the scale of those in the Calumet region have played a major role in development in other places.
Still, there are many positive signs in the Calumet region. While it has not been possible to replace most of the jobs lost in the past 20 years in the Calumet region, much of the manufacturing base which remains in the bi-state Calumet region has modernized and is more competitive than it was. There are still more than 5000 companies in or near the region.8 Almost 25% of the steel produced in the United States is produced in mills in Northwest Indiana. And many of the industries in the Calumet region -- transportation equipment, chemical products, and industrial machinery among them -- are participating in an export boom which has made Chicago one of the top merchandise export regions in the United States.9
The agglomeration of firms in the Calumet region is an asset. When Southeast Chicago Development Commission survey 50 companies in the Calumet Industrial Corridor, 62.2% of the thirty-seven companies which responded said that relationships with other industries in the area was an important asset. 10
In spite of employment declines throughout the past twenty years, the steel industry still represents 35 percent of the total employment in the Lake Calumet Area, followed by automotive (26%), food (11%), chemical (8%), and machinery and electrical (7%). Together, these five sectors account for 87 percent of total employment in the Lake Calumet Area. The Calumet region's sectoral emphasis may present an opportunity since metals, chemicals, food, and printing and publishing are expected to account for much of the projected future growth in manufacturing jobs in the Chicago region. 11 The Ford Motor Company's assembly plant accounts for most of the auto employment. Within the food industry, the largest companies in the area are General Mills, American Maize Products, and Premier Candies.
According to a 1993 study by Olive Harvey Community College, there are industries in the Calumet region with growth potential, including transportation and distribution, retail trade, health services, and plastics and instruments and related products.
There have been a number of recent expansion and modernization projects including Acme Metals Inc. which has a $392 million project in Riverdale, a $30 million joint venture of Acme Metals Inc. and Tang Industries Inc. and the relocation of Steel Coils, Inc. to 118th Street and Stony Island Avenue. 12 Ford has completed a $238 million expansion project. The Chicago Enterprise Center, an industrial park whose tenants employed about 350 workers in 1995, was developed on a 123-acre site at 13535 South Torrence.13
The LTV site between Avenue and the Calumet River, and between 122nd Street on the north and 130th Street on the south, is being developed by Anderson Schroud, although development efforts seems to be moving very slowly. It is not attracting the Ford suppliers which were expected. It may take more resources to pull off the redevelopment than expected or now in hand.
Also, the very large U.S. Steel plant at 87th Street and the Wisconsin Steel facility will soon be ready for reuse. However, while USX's South Chicago site is a prime site, there is no nearby expressway and USX is not moving quickly to develop the site. The Wisconsin Steel site is not expected to be fit for redevelopment until after the year 2000.
The Illinois Port Authority built the Harborside Golf Course, located east of the Calumet Expressway and North of 115th Street on 428 acres of landfill and garbage dumps.14 Also, on the west side of Lake Calumet, the Illinois International Port owns a large amount of manufacturing zoned property which has superior truck and rail access, but leases limited to 20 years limit the chances of new investment for its highest value purpose. Some are also concerned about the strained relationship between the Port Commission and some local activists.
In 1993, 67 businesses in Southeast Chicago were surveyed by Olive Harvey Community College, 55% percent of which were in manufacturing. Forty-three percent projected that their business activity would be above average in the next two years because of the turnaround of the economy, more aggressive marketing, new products, and expansion. Only 12% expected it to be below average. (When asked about business activity for their operation over the past three years, 24% said it had been above average and 30% said it had been below average.) 15
Most of the firms surveyed by Olive Harvey plan to remain in their present location in the next 5 years, and about 20% plan to expand their physical plant. Firms who answered the Olive Harvey survey also plan almost $33 million in equipment investments in the next 5 years. 16
Forty of the firms said they anticipated more than 801 job openings over the next two years. (A large percentage (47%) of the job openings at these firms in recent years at these firms have been due to turnover.)17
Southeast Chicago Development Commission had similar findings when it surveyed 50 firms in the Calumet Industrial Corridor. Of the thirty-seven companies which responded, 32% said that they planned to expand in the next five years and 43% stated they would stay the same. Thirty-six respondents said they planned capital improvements, 44% of these improvements will be to increase productivity.18
The economy has evened out. It is no longer getting worse. The banking sector's interest in the region is growing (for example, First National and NBD are becoming more involved). More developers are coming in to take a look. More people understand that not everything in the region is contaminated. Five out of 12 sites in the most recent CANDO Industrial Showcase were in Southeast Chicago.
Southeast Chicago Development Commission is developing area-wide business plans for the Calumet Industrial Corridor and the other two industrial corridors in Southeast Chicago. 19 These plans should begin to address some of the concerns which local firms have about street conditions, sewer drainage, viaduct clearance, abandoned buildings, transportation and security. Southeast Chicago Development Commission (SCDCom)'s number one priority for 1996 is to market Southeast Chicago as a vibrant place to locate or expand business. Its efforts are widely praised, not just in the economic development community, but also by environmental groups trying to preserve natural assets. Many people in the region see SCDCom's industrial corridor initiatives -- in collaboration with Calumet Area Industrial Commission and other organizations -- as the best opportunity for renewal on the Illinois-side of the Calumet Region. Information about each corridor is provided below and in Table II.
The Calumet Industrial Corridor: The Calumet Industrial Corridor straddles the Calumet River and the foot of Lake Calumet from 138th Street north as far as the river's entry into Lake Michigan above 95th Street. The leading industrial sectors today are primary metals, trucking/warehousing, transportation equipment, and water transportation. 20 At the River's mouth is the USX Southworks site, across from warehouses of the Illinois International Port. Active producers of steel include Acme Metals, LTV Steel and Republic Engineered Steels. This corridor's largest employer is Ford Motor Company. Around Lake Calumet, the predominant industrial activity is bulk materials handling. These lands are leased to industrial users by the Illinois International Port. At the corridor's southernmost point is the modern business park, the Chicago Enterprise Center, developed on a former U.S. Steel warehouse site. To the west and northwest of the Corridor is a largely undeveloped area comprised mainly of wetlands and landfill. 21
Ready access to rail and water transport remains one of the strongest assets of the Calumet industrial environment. Norfolk Southern's Triple Crown intermodal facility is just northwest of the corridor. Barge service to the Mississippi and ocean vessel service to the Atlantic are available. However, internal traffic circulation suffers from the absence of east-west routes. 22
Finding new uses for the USX South Works (585 acres) and Wisconsin Steel (176 acres with strong truck, rail, and water access) are major challenges facing the Calumet Corridor. 23 Denver-based Omnitrax, already the owner of three short-line railroads serving the Calumet Corridor, might be interested in the Wisconsin Steel site once it is cleaned up in the next few years. Don Shroud has already purchased a third 254 acre site previously owned by LTV Steel, although redevelopment has been slow.
On the west side of Lake Calumet, the Illinois International Port owns a large amount of manufacturing zoned property which has superior truck and rail access. Longer leases than 20 years or outright sales would improve the chances of new investment.24
The Pullman Corridor: The Pullman Corridor extends for over 2 miles along a north-south axis between the Calumet Expressway and the residential communities of Pullman and Roseland bordering the Metro tracks. Key industries include trucking and warehousing, chemical, transportation equipment, manufacturing, trucking and warehousing, food products, and primary metals. The largest employers are Morrison Knudsen and Joseph T. Ryerson and Son. 25
The Burnside Corridor: The Burnside Corridor occupies a U-shaped area west of the Norfolk Southern railroad tracks between 85th Street and the Stony Island connector to the Calumet Expressway. The predominant employer is paper products manufacturing with 4 firms employing 20% of workers, but the area has a diverse industrial base including fabricated metal, industrial machinery, chemical products, printing and publishing, and other sectors. Most of its vacant land is concentrated in a single site, the former Burnside Steel Foundry at 1300 East 92nd Place. This site is one of the brownfield demonstration sites of the Chicago Department of Environment, and it soon will be available for redevelopment. 26
Table II. Calumet Region Industrial Corridors (in Illinois)
| Calumet | Pullman | Burnside | |
| Industrial Firms | 64 | 35 | 26 |
| Industrial Workers | 7791 | 3250 | 3750 |
| Predominant SIC | |||
|
33 | 42 | 26 |
|
37 | 42 | 26 |
| Land Use in Acres | |||
|
2268 | 329 | 207 |
|
103 | 24 | <1 |
|
1071 | 62 | 65 |
|
4 | 21 | <1 |
|
3447 | 434 | 272 |
| Employment Density | |||
|
2 | 7 | 14 |
|
3 | 10 | 18 |
|
122 | 93 | 144 |
26= Paper & Allied Products
33= Primary Metals
37=Transportation Equipment
42=Trucking & Warehousing
Source: Corridors of Industrial Opportunity: A Plan for Industry in Chicago's South Side, Department of Planning and Development, March 1995
It is not yet clear that economic development work for local companies will lead to a local payoff in hiring and improvements in the lives of residents, but this will continue to be the goal. The economic opportunities available to residents of the Calumet region are described in the Community Section of this report.
In Northwest Indiana, unemployment has been falling and job growth is slowly increasing. While per capita income is still lower than Indiana, Illinois or the U.S., it is growing more quickly. The Northwest Indiana Forum has a five-year regional economic development program called invision 2000 for Northwest Indiana. It includes business assistance directed at retention and expansion and new business recruitment. Special projects include a workforce education and training initiative and a quality of life initiative including indicators and local projects. A broad range of residents of the region support these initiative. However, some would like the Northwest Indiana Forum to more fully embrace environmental clean up as a basic requirement for economic revitalization. Others are concerned that there is not a bigger focus by the Northwest Indiana Forum on businesses in the core areas.
There are probably many more development plans for the Calumet, but it is in people's self interest to hold their plans close to their chests until they are ready to run.
Emerging Opportunities
With over $1 billion in new capital investment. industrial development must have a future in the Calumet region. Some new companies are coming to both Southeast Chicago and Northwest Indiana. Perhaps the best sign on the Illinois side for spurring manufacturing activity is the Industrial Corridor Projects. The planning process has been open and natural assets and sensitive development are part of the plan. Positive signs on the Indiana side include the various initiatives of the Northwest Indiana Forum and the Harbor dialogs. And the casinos are bringing money into Northwest Indiana.
Another opportunity may be in expanding recycling and reuse activity in the region. As shown below in Table III, steel production accounts for not only a large share of jobs, but also a far larger share of solid waste. Chemicals account for the highest amount of solid waste per job. In fact, these sectors account for a big share of the problems with toxic chemicals, energy intensity, as well as much of the scrap that can be reused and recycled in the Calumet region. The large amount of wastes produced by key industries could become an opportunity if new markets could be developed for these wastes.
Table III
Employment Shares and
Tons of Solid Waste for Key Lake Calumet Area Sectors
|
Steel Automotive Food Chemical Machinery & Elec. Lumber & Wood Stone, Clay & Glass |
Share of Employment
35% |
Ton/Yr Solid Waste
140,387 |
Source: Lake Calumet Airport Feasibility Study From International Technology Corporation, 1990. The solid waste figures are old and only show general orders of magnitude.
Recycling and reuse may be a particularly great opportunity for the Calumet region because a great deal of material flows through the Calumet region through the wholesaling sector, a sector which is projected to be a major source of growth in jobs. 27 In fact, job growth is already high in the wholesale scrap trade and could grow even more. In addition, the region has a huge capacity to handle and transport materials. The wholesale and transportation sectors may have a key role in efforts to enhance material reuse and produce new business and job opportunities. However, there needs to be better documentation of the current capacity of material handling and transportation infrastructure.
The Chicago/Northwest Indiana region's steel producers and ferrous scrap dealers and users reuse millions of tons of scrap each year. Much of the steel produced in the region is used in Chicago by firms which then also produce scrap. And more than 60% of all steel produced is now recycled.28 The data indicate that more reuse and recycling could not only reduce virgin material and waste, but also energy consumption.
The Calumet region in Illinois has substantial recycling capacity. Although Northwest Indiana may not now have sufficient material processing capacity to handle its potential recyclables (some materials are now hauled to Illinois), it has a strong base of scrap-based manufacturers who could help close the loop, including the firms in Table IV.
Table IV. Some Materials Reuse Capacity in Northwest Indiana
|
Material Newspaper
Scrap Steel |
Company
Keyes Fibre Col |
Daily Scrap Used
70 tons |
% Scrap in Product 100% 100% 100% 100% 100% |
Source: PAHLS Inc., The Environment of Northwest Indiana, Contrasts and Dilemmas, Valparaiso, Indiana, p. 17.
Another growth industry opportunity might be environmental remediation. The Calumet region provides an excellent field laboratory for new remediation technology.29 The many universities in the region could collaborate with local firms and environmental agencies on applied research and development into new technologies which could help remediate the Calumet region and produce new jobs in clean up.
More jobs and economic activity in transportation could grow from the density of classification yards, intermodal terminals, and rail rights-of-way in the region. The Federal Railway Administration has been documenting the problem of rail congestion across the nation, including in the Calumet region. Unfortunately, so far, the industry response has been to build new facilities further out and put old yards on the block. In fact, the opportunity to build on the Calumet region's transportation base may disappear as rights of way are absorbed into new development and lost.30
The ports in the Calumet region could also provide a source of new jobs and development. Because of NAFTA and other trade agreements, there is a new federal thrust for ports redevelopment. One of the champions for this thrust has been Dick Munson at Northeast Midwest Institute. Of course, this strategy depends on interest among leadership of the port authority.
Because of its extensive lake-front areas, tourism is another opportunity. Three gambling boats recently docked in Hammond and Gary. Another boat will arrive in east Chicago, Indiana in 1997. The Gary site was part of a 1100-acre Planet Park commercial-recreation area near the Gary airport. The Northwest Indiana Forum and environmental groups are seeking to develop one or more environmentally clean 100 acre sites in the same complex. There are also new recreational boat marinas along the waterfront. New tax monies will improve public services and provide credit to finance infrastructure to attract environmentally-neutral businesses to the area.31
There is also the tourism which would accompany the creation of a Calumet ecological park. Residents throughout the region have been rallying support for this idea for many years. Representative Jerry Weller has now proposed federal legislation which has been passed to direct the Park Service to study the economic and ecological benefits and costs of such a proposal. There are many current efforts to preserve natural areas in the region which are described in the Ecology section of this report.
There are also efforts to develop tourism in Pullman where the Historic North Pullman organization is operating a museum and educating the public about the history of Pullman and the role of African Americans in it success. Over 100 thousand people, including school groups, visit Pullman each year. A state-funded Transportation Museum is planned in the Pullman Historic District.32
Retail and commercial development is also an opportunity for the Calumet region. Such development may get a boost from the Metra plan to extend the commuter train line from 91st Street to 93rd Street. Transit-oriented development around commuter train and bus stations may be a prime way to spur local retail development in several places in the region.
In addition, the Chicago Department of Planning and Development is working to assemble larger commercial sites for developments by coupling city-owned land with tax activated properties and private land. It will also work on improving public transportation in the districts where it is poor and allowing use of TIFs to quality for CDBG funding.33
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