Economic alchemy that transformed a town

EVERYBODY loves a come-from-behind victory where working-class heroes succeed against incredible odds. Here in Colorado, they have one of those stories. In fact, few economic turnarounds are more dramatic than the revolution in Pueblo - a city recently rated by University of Kentucky researchers as the No. 1 place to live in the United States.

``We're really the envy of the state,'' says Gene Wilcoxson, who owns a Buick dealership and is a member of the Pueblo Economic Development Corporation (PEDCO), which has been a driving force behind the city's economic revival. ``We've been able to accomplish things unheard of for a city of our size.''

Hard to imagine that just a few years ago, Pueblo was a one-horse, down-at-the-mouth, sooty, smelly steel town referred to by many Coloradans as ``P.U. Town'' - or worse, just ``P-Town.''

In 1982, the city's unemployment rate hit 19.3 percent, later dropping to hover in the 14 to 16 percent range for nearly two years. Longtime residents began leaving for greener pastures. Others began commuting to jobs in distant cities. In August 1984, the Wall Street Journal wrote what was essentially Pueblo's economic obituary. The article contrasted a thriving Colorado Springs economy to ``the sooty gloom in nearby Pueblo....''

About that time, however, the rising stars of other Colorado cities began to fade: The bottom fell out of the oil industry, hitting Denver hard as oil prices pitched downward; a nationwide downturn in the computer industry in 1985 stifled growth in both Colorado Springs and Denver.

Pueblo, however, bucked most of the statewide recession wave. Starting in 1984, a conscious effort was made to attract companies involved in light-to-medium manufacturing. Over four years, the city has persuaded 16 companies to locate here.

``Pueblo kept on its feet and has continued to move ahead while the rest of the state was stagnating,'' says Michael Griffin, manager of Pueblo's Job Services Center, part of Colorado's division of employment security. ``The rest of the state has acknowledged it.''

The influx of new companies has produced more than 2,000 direct jobs. Most factories are part of the airport industrial park, where buildings lie checkered across the near-desert landscape of this arid, southern Colorado city. Sagebrush and bare ground extend beyond these streets.

The distant Rocky Mountains, once obscured by smog, provide a purple-hued backdrop to the city. Pueblo's long-tarnished image, like its air, has been getting a good scrubbing, too.

Fat and happy yields to reality

Even with the turnaround, there is little evidence of complacency in Pueblo. So far, the unemployment rate has fallen to just over 8 percent and continues to trend downward. But the city's economic leaders know how quickly an economy can flip-flop. They remember the solid '70s, when steel was the core of Pueblo's economy.

``We were fat, dumb, and happy,'' says Mr. Wilcoxson. He ruefully recalls the years of hefty union wages followed by ``the massacre'' of '84, when the CF&I steel mill cut 4,200 jobs in a few months.

As unemployment surged between 1980 and 1984, Pueblo's population shrank and its work force dwindled from 54,000 to 46,000. Today the population has bumped back over 100,000, and the labor force has increased to more than 51,000.

``We're not a booming community yet,'' says Harvey Paneitz, PEDCO's executive director. ``We're just putting people back to work.'' He predicts it will take three to five years for unemployment and the Pueblo economy to be ``where we want it to be.''

But for years it seemed that Pueblo might just dry up and blow away. CF&I was just barely hanging on. Only few years ago, steel fence posts made in Japan were selling on the streets of Pueblo for a dollar less than CF&I could sell them.

Then something startling and innovative happened: Pueblo's residents took charge of their own economic destiny, setting out to broaden the industrial base by attracting new business.

``We are not fancy educated people,'' says Walter Bassett, owner of a local construction company and a founding member of PEDCO. ``We just got together and said: `we've got to do something.'''

What Mr. Bassett did was to put up $50,000 of his own money to hire a marketing expert. That was not so unusual. There are an estimated 15,000 such ``experts'' representing towns and cities nationwide. But a small PEDCO group soon worked out an innovative deal with county commissioners, city council members, and the local chamber of commerce. By mutual consent, government ceded responsibility for Pueblo's economy to PEDCO.

``It used to be that we had three groups competing with each other,'' says Harold Mabie, chairman of PEDCO. ``Even when we got a viable lead, the person would leave with the perception that this community didn't have its act together.''

`One-stop shopping'

Mr. Mabie likes to point out that Denver has 44 agencies involved in economic development, while Pueblo has just one. PEDCO has created ``one-stop shopping'' for businessmen. Red tape is eliminated. When PEDCO makes a deal, it makes it on behalf of the city and county.

About a year after PEDCO was going full throttle, the group caught the attention of management at Sperry (now Unisys). The big computermaker was looking at 126 cities nationwide for a location to build a new factory.

Richard Stark, who headed the search for Sperry, discovered that Pueblo had the lowest cost of living among cities its size in the United States. Sixty-six percent of its residents owned their own homes - the highest level in the nation. It was a combination likely to keep personnel happy and wage costs down.

``We became convinced that the cost of doing business in Pueblo would increase less than in Denver,'' says Mr. Stark, now the production manager at Unisys. ``The work ethic is very strong here. And besides, there's something about the goofy mountains that seems to attract people.''

Pueblo gave Unisys 26 acres at the industrial park for $1 an acre, and built $6.5 million worth of roads, sewers, and water lines. There was a feeling that Unisys was ``the big fish'' that would lure others.

It did. After Sperry took the plunge, Target built a distribution center, McDonnell Douglas built a rocket factory, and B.F. Goodrich built a brake plant. Smaller manufacturers joined the pack. In June, PEDCO persuaded Trans World Airlines to become the first national carrier to fly to Pueblo.

Cooperation between PEDCO and local colleges has been vital. Pueblo Community College guarantees new companies a ready supply of custom-trained factory workers. The local state university supplies advanced management training.

``I feel like I'm a lucky person,'' says Daniel Gonzales, a former ironworker who used to commute to Denver and Colorado Springs to find work. ``Last winter was my first winter inside.'' Since retraining, he is a machine tool operator at Trane, a manufacturer of air conditioning equipment that recently located in Pueblo.

Although CF&I is still Pueblo's biggest employer, the local economy is now diversified and better insulated from single-industry recessions.

``Pueblo would still be in bad shape if it weren't for a community that finally sat down and said, Let's put it in a package so that somebody can see it,'' says William Askwig, chairman of the department of business administration at the University of Southern Colorado in Pueblo.

Pueblo's efforts to market itself resemble the wimpy Clark Kent-to-Superman transformation, with a hit squad of crack salesman ready to spring into action. ``These guys could sell iceboxes to eskimos,'' says Roger Harkens, an independent marketing consultant in Pueblo.

A development plan in a week

At the merest hint that a company might be interested in locating in Colorado, PEDCO quickly researches the company's needs and presents a detailed development plan in a week - or less.

One small manufacturing company, Atlas Pacific, had already decided to build a factory in Colorado Springs - but ended up in Pueblo instead. The change of heart followed an 11th-hour sales presentation by PEDCO officials.

``It became clear to us that while Colorado Springs was ready to accept us, it was Pueblo that really wanted us,'' says Geoffrey Gordon, chairman of Atlas Pacific.

Unlike many other small cities and towns in the Midwest, Pueblo did not rely on multiple trips overseas to woo the Japanese or Koreans. Its efforts are aimed at luring companies from overcrowded, high-cost US cities.

Yet, international opportunities do present themselves. A Canadian plastic bag manufacturer located here. Most recently an Australian hair-care manufacturer and a Chinese bicycle company knocked on Pueblo's door. With so many new faces in town, there is a continuing effort to shed the city's image as a cultural backwater.

``Pueblo was a cow town,'' says Ellen Bassett, who is Mr. Bassett's wife and a lifelong resident. ``My mother didn't want to come here. She thought it was the end of the earth.''

Pueblo these days is not quite ``the end of the earth.'' An art museum and local symphony are blossoming, though it seems unlikely the city will ever be a glitzy place.

Still, Pueblo has other, less tangible virtues.

``I enjoy going to the grocery store and knowing 15 people,'' Mrs. Bassett says. ``People smile at you on the sidewalk. But I'm telling you, a few years ago it was either turn this around or get out of here.''