Locations -- Second Thoughts Lead To Second Chance

Dec. 21, 2004
Indiana tax program, other promises, prompt Hartmarx Corp. to keep open some of its Michigan City operations.

Two years ago Hartmarx Corp., a Chicago-based maker of men's clothing, found itself facing a challenge all-too-familiar to manufacturers today: Overseas competition had eroded the margins on some of its products, and as a result the company starting phasing out a cutting plant, distribution center and administrative offices in Michigan City, Ind. The site had a long history of clothing manufacture in the community, dating back to 1922, and the mayor and others were loathe to lose the jobs and the historic corporate citizen. This story, however, doesn't end with shuttered buildings and total elimination of a workforce. Although not all of the jobs were kept, the Hartmarx Michigan City site can at least be a hopeful sign to U.S. manufacturing and, perhaps, offers a glimpse of the future of manufacturing. A Sweetened Deal Hard work and compromise on the part of local, county and state officials and union members prompted Hartmarx to keep open its distribution center in the city, preserving 85 jobs. Fifty workers had already lost jobs when the cutting plant closed in 2001. Although the cutting facility is gone, the 200,000-square-foot distribution center remains a vital part of the $570 million Chicago-based company, according to Lennart Bjorklund, executive vice president of manufacturing for the Hartmarx division of Hart Schaffner & Marx and supervisor of the Michigan City site. Hartmarx maintains substantial manufacturing in the United States in several cities, such as Chicago and Buffalo, but it also is outsourcing some work overseas. Why did it decide to keep open the Michigan City distribution operations? For one thing, a new provision in Indiana's taxes will save Hartmarx about $60,000 annually. Additionally, the company will enjoy reductions in real estate, inventory and other taxes, and the city has promised to upgrade nearby infrastructure, such as water lines. The site's union, UNITE, also renegotiated its contract. "All of this made it make sense to continue distributing in Michigan City," Bjorklund says. Sign Of Things To Come? Michigan City Mayor Sheila Brillson says her community of 34,000 people relies heavily on manufacturing for jobs. Recognizing that it can't compete directly with cheap overseas labor, the northwest Indiana city has focused on its strengths as a distribution point -- it's located roughly in the middle of the country and within two hours of Chicago -- and its history as a site for the manufacture of plastics, food products and steel byproducts. The drive to keep Hartmarx in Michigan City is one she expects to repeat with other companies in the future. "We fight for every job we have," she says. Locations profiles selected siting and facility strategies by manufacturing companies. Send submissions to Senior Editor John S. McClenahen at [email protected].

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