The federal government has decided to try to make a steel plant closing in Youngstown. Ohio, a national model for economic recovery.

As the first phase of the project, the Department of Housing and Urban Development yesterday signed a $300,000 contract with a Washington research group to study ways to reopen the plant and save 5,000 jobs.

The key option that the group, the National Center for Economic Alternatives, will look into is a community and worker takeover of the Campbell works plant of the Youngstown Sheet and Tube Co.

The group also is supposed to find ways for HUD and other federal agencies to channel assistance to Youngstown to restore its economy.

HUD officials indicated they hope that any plans the center develops can be used in other communities in the Northeast and the Midwest facing similar plant shutdowns and job losses.

Youngstown Sheet and Tube Co., a subsidiary of Lykes Corp., a New New Orleans conglomerate, sent shockwaves through the Youngstown area last September when it announced it was laying of 5,000 workers at its aging Campbell works.

Since that time, a well-organized coalition of religious and community leaders has been working to find ways to reverse the job losses.

HUD cited two groups - the Ecumenial Coalition of the Mohaning Valley, which includes some 250 churches, and the Mahoning Valley Economic Development Committee - in announcing the contract.

"This commendable community support is precisely the sort of local effort we are looking for the developing new federal strategies to support areas like Youngstown when faced with devastating plant closings." HUD Secretary Patricia Roberts Harris said in a prepared statement.

An engineering study earlier this month suggested it was possible for the plant to be reopened gradually beginning next fall and to be earning a profit by the early 1980s. A capital investment of $535 million would be necessary to do this, about 40 per cent of which would have to be raised in the next two years, the engineering consultants said.

They estimated that 2,000 currently idle steel workers could be re-employed by the end of 1979, a number that could gradually increase to 5,000.

Under the HUD contract, the National Center for Economic Alternatives is to "explore the full range of possibilities for continuing operation of the plant."

It is to recommend ways to generate local financial support, to use new technology to develop more efficient steel production and to find the best way to use federal dollars to keep steelworkers working.