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Open for Business
Tomas Kellner,
09.06.04

Pennsylvania was a blue state in the 2000 election. But in politically
divided Johnstown, it's the color of money that counts.
Johnstown, Pa. is a swing town in a swing state. Last
time Al Gore edged out George W. Bush in surrounding Cambria County by
1,700 votes out of 60,000 cast. The same folks reelected Republican
Senator Rick Santorum by 582 ballots. Today Johnstown, a hardscrabble
blue-collar community, is still politically split down the middle, as is
much of Pennsylvania, whose 21 electoral votes are very much up for grabs
this November.

By The Numbers

From Rust to Bust
Johnstown
has a history of climbing out of adversity. Can it do so again?

$23,885  Average per capita
annual income.

41.2 years  The median age
of the city's population.

13.7% The percentage of
Johnstownians who hold B.A. degrees.

$62,700  The median price
of a house in the area.

Sources: Johnstown Chamber of Commerce;
U.S. Census Bureau.

Step into town--wedged between steep verdant hills and
the Stony Creek and the Little Conemaugh rivers--and you get a very
different picture. From its spotless streets and carefully hoed pansy beds
on front lawns, you'd hardly suspect how much the city is hurting.
Unemployment, while down from 8% in January, hangs stubbornly high at
7.4%, above the state's rate (5.6%), which is identical to that of the
U.S. At $28,000, median household income is one-third lower than that of
the nation; houses sell for as little as $18,000, and $150,000 will get
you a five-bedroom mansion. Walk the neighborhoods and you won't find any
gutted homes, graffiti or panhandlers. You also won't find any teenagers
on skateboards or young moms. Since 1990 the number of Johnstownians
between 18 and 35 has shrunk by a quarter.

It sounds like a perfect opportunity for political
exploitation by one party or another. But Johnstown has survived by
putting aside partisan politics. While it may have gone blue in 2000, it's
the color of money that really counts here. Republican businessmen have
bankrolled Democratic politicians who fetch government money and
contracts, and solid Democrats behave in avowedly libertarian ways
whenever that will benefit their enterprises.

People from opposite poles have had to find common cause,
thanks to Johnstown's cursed history. A flood in 1889 killed 2,200 people,
all but wiping the town off the map. A milder flood in 1977 ripped up
sewers and roads, causing $300 million in damage. Already hurting from
cheap Japanese and Korean imports, Bethlehem Steel, the town's largest
employer, slashed its payroll of 13,000 by 40% and eventually shut down
for good in 1992. Johnstown's jobless rate shot up to 24%, the highest in
the nation. Its population dropped 48% between 1960 and 1990 to
28,000.

The demoralized city found
help in John Murtha, a powerful dealmaker on the House Appropriations
Committee. Murtha, a Democrat who used to run a car wash in Johnstown and
was first elected to Congress in 1974, promised to bring money and jobs.
That endeared him to many Republican businessmen. "You're damn right they
switched," says Murtha of those who cross party lines to vote for him. "We
take care of the base." Translation: Bring in the pork--as in hundreds of
millions of dollars over the span of his political career in federal aid
to fix roads, sewers and water pipes--to lure private enterprise, in this
case defense contractors.

Republicans play a similar game. Donato Zucco, a
Republican and mayor since 1994, works closely with Murtha and state
politicians, mostly Democrats, to get funding. Every six weeks he meets
with 35 chief executives from Johnstown's largest companies, then goes off
lobbying to Harrisburg or Washington. In good GOP fashion he has revamped
and trimmed the city's budget and contracted out the management of
municipal parking garages. But he has also increased the tax base by going
after three hospitals to challenge their tax-exempt status in court. The
hospitals settled and now pay $350,000 into the city coffers every
year.

What holds Johnstown together?
Let's answer that question by looking at four very different
employers.

The Accidental Entrepreneur
William
Polacek leaned on the government twice. Once to train unemployed
veterans, welfare recipients and petty criminals. And once for a $325,000
cleanup grant, part of Pennsylvania's brownfield program, to expand his
Johnstown Welding & Fabrication Industries into a plant once owned by
Bethlehem Steel. Fourteen years later Polacek, who started out welding
leaky boilers and cracked car frames, employs 400 people and is on track
to earn $3 million on $90 million in revenue. "This guy is something,"
says Representative Murtha. "He did this on his own."

"I had no other choice," says Polacek, 43. "It was either
that or leave town."

Polacek's
grandfather was a "hunky," an unskilled eastern European who stoked
Bethlehem blast furnaces six days a week for $1.50 a day. Bill's dad, a
loyal union man, made $10,000 a year welding iron for Bethlehem, not
enough to support nine kids. So he started a small welding shop in his
garage--which provided son Bill with a trade that would carry him through
rough jobless patches in Johnstown (Bethlehem was a perpetual layoff
machine after the 1977 flood--and the cascade of cheap imports) and three
years knocking around the South.

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