Midwest to Enjoy Continued Growth

N.Y. Times News Service

CHICAGO _ After a year that exceeded most expectations, manufacturers, retailers and farmers in the Middle West are looking forward to another strong performance in 1995.

Orders by auto makers, appliance companies, manufacturers of heavy trucks, rail equipment and construction machinery for components and equipment have factories from Pennsylvania to the Rockies humming _ and hiring. And the new jobs are expected to add enough to consumer spending power to protect regional retailers from sales declines despite rising interest rates.

The manufacturers are reaping the benefits of their 1980s streamlining and of growing export markets. Caterpillar Inc., the strike-ridden Peoria, Ill., manufacturer of heavy construction machinery, expects record earnings this year regardless of how its labor woes play out.

At the Inland Steel Co., which returned to profitability in 1994 after four years of losses, marketers are reveling in the challenges of allocating production among eager customers.

A few manufacturers are constructing new factories at home, including Motorola Inc., which is building a $100 million cellular phone factory at Harvard, Ill., and the Whirlpool Corp., which is spending at least as much on a new appliance factory near Tulsa.

Many others, though, are counting on continuing profits from the current economic boom to finance expansion into faster-growing foreign markets, especially Asia and Latin America.

Record harvests last year led the Department of Agriculture to force farmers in its subsidy programs to take 7.5 percent of their corn land out of production this year.

But agricultural experts say that good weather could easily result in another bumper harvest as farmers will take their least productive land out of crops while continuing to upgrade their equipment and seed quality. Net profits could decline, though, because the cost of fertilizer and other supplies is climbing.

One bleak spot for many farmers is the price of pork, which has fallen below the cost of production. Agricultural economists say that many smaller producers may be driven out of business this year unless prices rebound sharply.

Copyright 1995
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