Hoosier high-tech

Appearances in this small, pleasant community can be deceiving.

Cows graze lazily within sight of a tall water tower that reads, simply, ''Dale.'' Two traffic lights flash incessantly over the street-corner businesses at the intersection of two highways. A few miles south stand two low buildings - surrounded by cornfields, but full of sleek blue and green machines that offer a hint of Indiana's industrial potential.

Welcome to Dale, Ind., population, 1,693; robots, 30.

In the smaller of the two buildings of the Thermwood Corporation here, the tall and curly-haired president walks along the various demonstrator robots. He describes each model, several of which look like giant arms crooked upward, but something else occupies his thought as well. Like an increasing number of business, government, and academic leaders in this economically depressed state, he wonders aloud about Indiana's potential as a high-technology center.

A few years ago, the idea would have inspired no more than a patronizing smile. But a 3 1/2-year regional recession is changing that. Indiana's unadjusted unemployment figures for April stood at 12.3 percent; personal income growth from 1978 to 1981 lagged behind every other Great Lakes state. More important, the state Commerce Department predicts permanent loss of 50,000 to 60 ,000 automobile-related jobs in the state.

For a healthy recovery, Indiana must shift its labor force from reliance on traditional manufacturing such as automobiles and steel - two pillars of Indiana's economy. And here, the high-tech success stories of Boston's Route 128 beltway and California's Silicon Valley shine with bright promise. Government, business, and academic leaders are working mightily to make sure it develops in Indiana.

To be sure, scholars and economists remain dubious that the state can nurture a Silicon Valley boom. ''In Indiana?'' exclaims Bn incredulous Edward B. Roberts , chairman of the technology management group at the Massachusetts Institute of Technology (MIT). Competition among states for high-tech firms is aggressive, and experts are skeptical that Indiana offers those companies more than other states.

Successful or not, the bold experiments in economic development point to the possibility of another development here - intangible but perhaps more profound: a change in attitude.

Eight years ago, Thermwood's Ken Susnjara began to turn a crisis into a blessing.

At the time, the Arab oil embargo was squeezing his plastics company and raw materials prices were quadrupling. So Mr. Susnjara, casting about for a new industry to get into, took a good look at his company. What he noticed was that 60 to 70 percent of the machines were produced in-house. ''I decided to get into (building) not only machines, but computer-controlled machines,'' he recalls. ''Unfortunately, we knew nothing about computers, which was a bit of a stumbling block.''

Nevertheless, two years and $1 million later, the firm had an operating wood-routing machine that was self-operating enough to be considered a robot. By 1981, the robotics division was doing well enough that Susnjara sold off the plastics part of his company. And he has concentrated on developing the steel and plastic robots ever since.

While gross sales of $6.5 million doesn't make Thermwood an industrial giant, it is the kind of small, innovative company that high-tech booms are built on.

State governments have baited many a line to attract high-tech businesses. Michigan officials telephone Susnjara twice a month urging him to move to their state, which is trying to develop as a robotics center. But according to experts who have studied the Boston and Silicon Valley phenomena, government programs alone are ineffective.

Small, innovative firms provide the foundation for a high-tech boom, they say , because they attract talented individuals and train engineers in several skills. In Boston and Silicon Valley, these engineers often left their companies and started up their own firms, usually in the same area. ''If that spinoff spawns another spinoff, then it sets up an incubator effect,'' says Albert Bruno , a business administration professor at the University of Santa Clara.

Thermwood has other factors going for it, Susnjara says, because the area offers cheap industrial land, relatively good access to the Midwest's industrial sector, skilled laborers raised with the rural work ethic, and a choice location for executives to raise a family.

The problem is its isolated location. Surrounded by such metropolises as Jasper, Boonville, and Tell City, Ind., Dale finds itself in the boondocks. Like much of the rest of the state, it lacks important elements that helped to build Silicon Valley and other high-tech areas. Scholars say Indiana needs experienced entrepreneurs, access to suppliers and potential markets, and venture capital. Another crucial factor: a top-notch technological university.

''I don't think high-tech begins with a high-technology park,'' says Robert Spitzer, president of the Milwaukee School of Engineering. ''I think it begins with education.'' Scholars say it is no accident that Stanford University in Stanford, Calif., and MIT in Cambridge, Mass., are in the nation's two best-known high-tech centers. ''I really think you have to be around the technological institutions to be in the forefront of technology,'' Bruno says. ''You want to create that network of smart people working on important problems.''

For example, when the Cetus Corporation in Berkeley, Calif., wanted to create a genetic engineering research center for agriculture, it came to the University of Wisconsin at Madison. Well known for its agricultural expertise and its history of working with industry, the university serves as a magnet for bringing in more talent, says company Vice-President William F. Amon Jr.

''If it weren't for the university, we would have immediately set up that operation in California,'' Mr. Amon says. ''You can't bring a superb scientist into isolation and expect him to be happy. He has to interact with his peers.''

That is one reason Thermwood's research and development arm is in Dallas. But state government officials argue that as high-tech firms expand, they will look to the Midwest to manufacture their products. The question is how Indiana, in the words of Susnjara, can ''grease the slide'' for new types of business to prosper here.

In Anderson, Ind., 170 miles north of Dale, the answer may lie in the success of frozen used auto tires and other plans.

In the commodious office of Mayor Thomas McMahan, a clock ticks ominously - as if time were running out for his town.

For almost two years now, the short, straight-talking mayor of Anderson has presided over a city in deep financial trouble. Massive layoffs at the city's two General Motors divisions have kept unemployment very high - latest figures put it at 19.3 percent.

''I know there's hardship out there,'' says Mr. McMahan, pointing out the window to the troubled business district five stories below. ''But people, by gum, they want to see this town succeed.''

Through its Anderson Business Development Corporation (ABDC), the city has initiated a two-pronged approach to diversify its economy.

For companies already operating in the city, ABDC offers low-interest loans and skilled labor searches. The efforts are mostly small-scale - program manager Richard Haines recently visited 16 companies with a desktop computer in tow that could be hooked into a data bank of the world's patents. ''In over half the cases manufacturers looked at new possibilities they never even dreamed of,'' he says.

The Best Ever Dairy, for example, was intrigued by an ''unmeltable'' frozen dessert and sent for samples. ''Frankly, it didn't taste too good,'' says president Lowell Hardacre. But ''we haven't quit looking.''

ABDC's riskiest venture is its attempt to lure innovative businesses to the area. In exchange for a company's promise to move to the city, ABDC spends $10, 000 to $20,000 for an independent analysis of the concern and its potential. If the analysis proves positive, the firm is offered help in relocating, training personnel, and finding venture capital.

Of a dozen projects in the works, the ABDC board has authorized that $100,000 in venture capital be offered to an unnamed equipment producer. Negotiations with the company are continuing. Another project being looked at it is a company that would deep-freeze used auto tires and sell the resulting rubber crumb for railroad crossings and other applications. ''It takes an innovative and courageous community, and we think Anderson has got the guts,'' Mr. Haines says.

This innovative spirit is an important factor in high-tech success, experts say. ''In Boston, in Texas, in California, there's such a climate that it's almost expected that people will start something new,'' says Professor Bruno. ''And there isn't that cultural expectation in a place like Indiana.''

Not yet.

But if Ken Susnjara's odyssey from plastics to robots and Anderson's project to deep-freeze auto tires signal a trend, then Hoosier high tech may be more than just pie in the sky.

Admittedly, Indiana has a bit of an image problem.

Mention Michigan, and people think of cars. Talk of the Hoosier State, and they ask you about the corn crop. Webster's Third New International Dictionary doesn't help matters, defining a Hoosier as ''an ignorant rustic,'' among other things.

But for all of its corn-pone image, the state possesses some surprising high-technology strengths, which state officials are eager to advertise.

Purdue University in West Lafayette, Ind., for example, is the nation's second-largest source of electrical and electronic engineers. Although Indiana as a whole graduates 3 percent of such engineers in the world, most are drawn away to opportunities of other states.

Someday, they may return if high-technology industries develop here, suggests David Reed, director of the state Commerce Department's economic analysis division. But it is on the shoulders of the state's highly skilled labor force that Indiana must build its high-tech future, he says. Indiana is the nation's sixth-largest employer of electronics, mostly in manufacturing. The Delco Electronics division of General Motors in Kokomo, for example, is the world's largest producer of engine control computers.

The task Indiana officials have set for themselves is to wean that labor force away from traditional manufacturing to more resilient industries. For the first time in New York State, for instance, more than half of its manufacturing jobs are directly involved with high technology. According to the American Electronics Association, various high-technology jobs in the Midwest are expected to increase from 42 to 143 percent from 1981 to 1985.

Seeing the need for such development, the Indiana General Assembly has passed several programs to boost Hoosier high tech. State Commerce Department officials , meanwhile, have picked out an area they call ''communication electronics'' as its potential growth industry. This includes everything from military radar to cable television.

But more important than the specific programs is a new entrepreneurial spirit emerging in government, business, and academic circles. ''We're demonstrating we have the right idea, the right attitude,'' says Robert V. Cummins, a consultant with the Indiana Department of Commerce.

Business and academia are beginning to work more closely, as evidenced by Purdue University's computer-robotics center for businesses to study applications. In communities other than Anderson, business and local government are forging closer ties as they attempt to diversify the economic base, state officials say. Even large electronics enterprises in the state welcome the push for high tech, such as the Mallory Capicitor Company in Indianapolis, which says it considers Indiana an excellent area for plant expansion.

''There's growing recognition that we should avoid becoming what I term as an 'industrial Appalachia,' '' says Morton J. Marcus, research economist with Indiana University's business school in Bloomington, Ind. ''I think what we're seeing now is a strategy. It's not a question of fixing a hole in this state's bicycle tire. We're talking generations.''

Back in Dale, Susnjara talks of the vast possibilities of robotics, poised to take off in the next decade. ''Will Dale, Indiana, become the great hope of Indiana?'' he asks rhetorically. Unless the state makes a great push for robotics, it probably will not, he says.

But one floor above the demonstrator robots that drone on in this early Midwestern afternoon, Susnjara adds with great conviction: ''It has the potential.''

of stories this month > Get unlimited stories
You've read  of  free articles. Subscribe to continue.

Unlimited digital access $11/month.

Get unlimited Monitor journalism.