The `second wave'. Small towns think Japan

Later this week, robed Shinto priests will perform a sacred ritual to bestow a blessing on a wide expanse of freshly turned earth that used to be a farmer's field here in central Indiana. Soon after, construction workers will begin to erect an auto assembly plant for a joint venture by Fuji Heavy Industries, which makes Subaru cars, and Isuzu Motors.

Factories like this - part of a giant first wave of Japanese investment - have now engendered a much more broadly based second wave: small Japanese companies arriving to supply parts and components to the Toyotas, Subarus, Sonys, and Panasonics that are now residents of middle America.

Tiny communities and modest cities that grew up beside the wide highways of the Midwest - places that still have V-J Day parades and an all-American appearance - now send delegations to Asia as routinely as their big-city counterparts do. They are after Japanese companies, trying to coax them to build factories and hire workers in their neighborhoods.

The first wave of investment arrived with the biggest Japanese companies, automakers like Nissan, Honda, Mazda, Mitsubishi, and Toyota that have built assembly plants in Illinois, Kentucky, Ohio, Tennessee, Michigan. That wave is largely over.

Now a second surge of investment is rolling across the Midwest as smaller Japanese companies hunt for towns and cities near the big Japanese auto and electronics plants.

Nowhere is trend more apparent than in Indiana, where not just big cities like Indianapolis but also small towns have been winning new factories and jobs. The influx of Japanese companies and improving local economies is so widespread that one mayor in south central Indiana calls his half of the state the new ``Silicon Valley of auto parts.''

Indiana itself is like a great ocean of farmland, dimpled by woodlands with flowering dogwood and crab-apple trees, pocketed by towns that are its islands of manufacturing. Wide, smooth highways meet in Indianapolis and branch to all points of the Midwest, including auto assembly plants in other states.

Along these highway spokes, small-town mayors, private citizens, chambers of commerce, and school superintendents are working together to convince teams of Japanese inspectors that their towns are ideal locations for factories.

Of course, good location is a nice asset. But the competition among states, and the cities within states, is so fierce that rural Indianans have been forced to break out of small-town molds and jump into new roles as global traders, translators, and mediators.

Only a few years ago, attracting international trade, industry, and investment was left to state and federal governments. Not anymore. Marketing saavy and geopolitical sophistication have soaked deeply into places like Shelbyville, Columbus, Seymour, Rushville, Richmond, Greenwood, Terre Haute, and Lafayette.

Whereas mayoral trade trips to Japan, Taiwan, South Korea, and China may once have been criticized as junkets, they have become almost routine. Full-time economic development professionals have been hired to run far-flung marketing campaigns and coordinate local with state efforts.

Surprising or not, the selling of tiny communities in middle America to the rest of the world seems to be succeeding.

``We just returned from Japan, Taiwan, and Korea,'' says Robert Stewart, mayor of Columbus, Ind., a city of about 32,000 people whose architectural landmarks and two resident Fortune 500 companies (Cummins Engine and Arvin Industries) set it apart from other cities in the state.

``What we're trying to do is to attract domestic or international companies wherever they are from,'' Mr. Stewart says. ``The new job opportunities are not coming from the Fortune 500 companies. Eighty percent of job creation is going to be with companies that have 100 employees or less.''

Columbus was one of the first Indiana cities with a full-time economic development director. He's been beating the bushes since 1975 to bring industry to the city. Since then, seven foreign companies investing about $100 million and employing about 280 people have settled there. The crowning reward, however, came last year when the city received word it had been chosen by the first large Japanese manufacturing company to locate in the southern half of the state.

That company, Enkei (short for Enshu-Keigo), which makes aluminum wheels, has brought 100 jobs so far, scores of spinoff jobs, and $20 million in investment. Last week, Stewart said he would soon announce the names of at least four more companies newly committed to building in the city - bringing yet another 350 jobs. One of the new companies is a Japanese auto parts maker that will invest $30 million.

Pushing beyond a mere sales pitch, towns of 15,000 and 50,000 are trying desperately to outdo each other by being better hosts to the Japanese - and trying to strike up genuine friendships.

In Seymour, a town of 16,000 in south central Indiana, Mayor William Bailey is busy lining up local families to be pen pals with Japanese managers and their families, who will soon arrive to run the new auto part factory there. Columbus's Mayor Stewart thinks a simple (though expensive) gesture of respect may have been the deciding factor in persuading Enkei to come to his city.

``When we received news that one of the founding partners of Enshu-Keigo had passed away suddenly, I traveled to Japan for the Buddhist funeral ceremony,'' Stewart says. ``It showed respect for the man and also turned out to be one of the wisest things we ever did - other cities [that wanted the factory] sent cards and letters.''

Indiana towns are indeed learning the ways of the world and beginning to approximate something like a global-consciousness movement on a widespread, very local level in this state.

In the northeastern corner of the state, city leaders in Fort Wayne have visited Japan several times and the city will soon send an entire high school marching band to visit Takaoka, its sister city in Japan. Three other small Indiana communities are considering sister-city ties with the Japanese. Friendship precedes economic benefits, city officials say.

In the southwest area, Terre Haute Mayor Pete Chalos has traveled to Japan several times to encourage investment. He is proud that Sony chose his city in which to build a $35 million compact disc production factory, one of only four CD plants operating in the United States.

In Seymour, Mayor Bailey says he is busy helping to create a community ``safety net'' to help families of Japanese managers adjust. Japanese technicians and a few managers (with families in tow) will arrive this year. The new $15 million Aisin-Seiki auto parts plant will employ 175 and may someday hire 500 local people.

In Columbus, Arthur Kroot, a businessman and civic leader, suggests quite seriously that each member of the Columbus City Council learn Japanese - at least enough to be courteous during visits by Japanese officials.

At Indiana University, Purdue University, Rose-Hulman Institute of Technology, and Earlham College, East Asian studies programs are gathering record numbers of students. The schools are also working with cities to design settlement programs that nestle the Japanese into American communities.

Although most foreign investment in Indiana has come from Europe, Japanese investment has been the most significant in recent years.

Since 1982, Indiana has seen $654.6 million in foreign investment and more than 3,400 jobs flow into the state. Of that total, Japanese investment accounted for 95.7 percent of total foreign investment. If the Subaru-Isuzu plant is removed from the investment numbers, Japanese investment in the state still hits 81.8 percent of the remaining $154.6 million foreign investment.

``American isolation from the rest of the world is so profound and longstanding, it is necessary to physically break through that barrier,'' says Kathryn Weathersby, outreach director for East Asian studies at Indiana University. ``In Richmond, Fort Wayne, and Terre Haute, a small number of community leaders who have had a good experience visiting Japan have on their return made a significant impact on their communities.''

Such efforts to accommodate, welcome, and understand the Japanese are more important than hyperbole, and they have had a significant effect on the Japanese, state officials say.

``A clear way of impressing the the Japanese is sincerity,'' says Larry Ingraham, the state's chief representative in Tokyo. ``Success can often be measured by the degree to which a town will go to convince them that they are needed and wanted.''

First of three articles. Next: Seymour welcomes Japan.