Rebuilding Down East

New England was once the cradle of U.S. industry, but in recent years it seemed on its way to becoming an economic graveyard. Burdened by the U.S.'s highest energy costs, dying markets and sky-high taxes, a steady stream of shoe, textile and lumber companies closed their doors or headed to more hospitable climes in the Southeast and West. New England first suffered the symptoms of economic decay, depression and disillusionment that have now become so common in American business.

Today, however, the six Northeastern states are riding out the recession with unaccustomed ease. Unemployment is 6.1% in Massachusetts, for example, as compared with a national average of 7.8%. Forecasters expect that the region's economy will decline by only about half as much as the U.S. generally. Says Lynn Browne, of the Federal Reserve Bank of Boston: "New England is stronger in relation to the rest of the country than at any time since World War II."

New England has already achieved the reindustrialization that is the goal of the program President Carter will announce this week. In place of its once mighty, but now outmoded, industries, the region has built a new economic base, primarily on high-technology companies. Manufacturers of everything from medical equipment to minicomputers have been lured to the area by its supply of skilled labor and a bouillabaisse of local and state investment incentives. "There's a spirit of industriousness here," says Richard Berube, of Digital Equipment Corp., which employs 25,000 workers in Massachusetts, Vermont, New Hampshire and Maine. "There is more sensitivity by governments to the conditions that help business grow."

The Northeast's new prosperity is found in cities as diverse as tiny North Berwick, Me., home of a new Pratt & Whitney jet-engine-parts plant, and old New Haven, Conn., where G & O Manufacturing Co. is building a new $5 million automotive radiator factory. The most glittering showcase is the string of high-technology companies ringing Boston on the Route 128 beltway led by giants like Polaroid, Raytheon and Itek. Massachusetts' 300 hi-tech firms now employ 150,000 workers.

New Hampshire, the only state in the union with no sales or broad-based income tax, has been growing faster than any other Eastern state except Florida. More than one-third of its manufacturing labor force is now employed in technological industries. Exxon and Burroughs have recently bought land for construction of major new plants in Connecticut. "We were arrogant and half asleep for 25 years, allowing what we had here to be drained away," says Connecticut Economic Development Commissioner Edward Stockton. "Now we have incentives to encourage businesses to settle and stay here."

The region's state governments have made creative use of economic sweeteners. Lowell, Mass., founded in 1826 as one of the U.S.'s earliest planned industrial communities, slipped into business decline when the textile industry moved south after World War II. But Lowell decided to prime its own pump. It sold urban-renewal land to new companies for 25-c- per sq. ft.; then it lent them money at low rates to build new plants. Wang Laboratories Inc., one of the UJS.'s leading manufacturers of word processors, received a $5 million low-interest loan from the federal Department of Housing and Urban Development to build a $ 15 million office tower there.

While Massachusetts has to capture high-tech companies, other states are using different approaches. Vermont is trying to create new jobs without damaging its image as the scenic Green Mountain State. Says John Simson, director of the state's planning office: "We're not smokestack chasing. We are doing quite a bit to spread our manufacturing base." General Electric Co., for example, built one plant in Burlington, but its second new factory is in Rutland, 67 miles to the south.

Remote, underdeveloped Maine, which has little to attract computer makers, is emphasizing its traditional assets in natural resources and local energy. Boise Cascade is building a $254 million papermill circuit that will draw 40% of its energy from wood waste and hydroelectric sources.

Rhode Island is developing the former U.S. Navy base at Quonset Point, the first home of World War II's ubiquitous Quonset huts, into an industrial park. Some 95 companies are already in place, including General Dynamics' Electric Boat Division, which employs 4,500 workers making nuclear submarine components. Kenyon Industries, of Kenyon, R.I., closed its Rossville, Ga., plant in August 1979 and consolidated its textile-finishing operations entirely in the smallest state. Says Chairman David Curtis: "The change in attitude of the New England governments was certainly a factor. We feel that if we have a problem, the Governor and two Senators will listen."

New England has shown that the Snowbelt states can cast off their old industrial base. The skilled labor force has quickly adapted to different industries; and local and state governments realized that cooperation with business rather than confrontation was the answer to economic ills. Instead of clinging to dying and unprofitable businesses, New England has ensured its economic future by seizing industry's new technologies.

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