Older residents of this Midwestern city still remember the days when the red brick tire factories on the edge of town belched smoke and the smell of baking rubber was everywhere.

Akron was "Tire Capital of the World," and rural blacks, Italian immigrants, and people from the mountains of Appalachia flocked here to work in tire plants on the Cuyahoga River.

All that is history now.

Early last year, Goodyear and Firestone, the world's largest tire companies, announced that they were ending production at the last two plants making passenger-car tires in Akron.

One month after Goodyear's shutdown in Akron, the company announced that it was investing $34 million in a new tire plant employing 2,000 persons -- in Chile.

That Goodyear investment decision provides a striking glimpse of the diverse operations of an enterprise unique in history: the modern multinational corporation.

Since 1945, U.S. compaines have gone abroad and changed the world and their own country in the process. American companies now have $150 billion invested overseas in plants and facilities that make up a vast commercial archipelago generating half a trillion dollars a year in sales.

This global expansion has put a few hundered multinational enterprises, Japanese and European as well as American, at the center of the world's economy.

Given the pervasivenes of the companies, it is almost inevitable that they are the subject of widespread controversy.

Hardly an international meeting passes without attacks on the "neocolonialism" of the multinationals. Suspicion of them has also been fed by their own confessions to the U.S. Securities and Exchange Commission of humdreds of millions of dollars in bribes and "questionable payments" to officials and customers abroad.

Economists and politicians debate the impact of these giant companies on jobs, trade, the dollar, taxes, poverty, malnutrition and foreign policy.

Their supporters view them as vanguards of the future in societies attempting to move out of the past. Since 1950, the corporations have transferred more capital and technology to developing countries than the World Bank and all its branches combined.

Against that contribution, however, is weight the criticism that some have benefited while others have been adversely affectd by their activities -- that the social and economic impact of the companies is yet to be measured and judged adequately.

Akron provides an unusually vivid example of how fundamental changes in the world economy are communicated in immediate human terms to one community by the multinational firms.

Akron, in fact, is a telling example of the extent to which American workers and consumers are affected by changes in labor costs, productivity, technology and raw material prices in distant corners of the world.

As this series of acticles will attempt to show, that tire factories of Akron are silent tosay for a complex blend of technological, social and economic factors, most of which are beyond the control of the Akron blue-collar work force.

The companies all muster sophisticated economic arguments to explain why they make tires today in places such as Chile and in new plants in the American South instead of Akron.

But for the men and women adversely affected by these shifts, no amount of explanations can wash away the anger.

One rubber plant after another has closed here. The silent factories, boarded up machine shops and inactive tire mold plants along Market and Main Streets look like some graveyard of the industrial revolution.

Some 25,000 blue-collar jobs have disappeared since 1950. Goodyear's prodution force alone is down to 4,000 from a wartime high of 19,000. Blue-collar workers make up the bulk of the city's unemployed.

Former Goodyear evployee Roger Cerasuolo, testifying in 1975 before a House subcommittee, portrayed the departure of five plants from Akron as a betrayal.

"Here is a company that has built a billion-dollar corporation because of the sweat, tears and muscles of Akron evployes," said Cerasuolo, "here is a company that feels it has the right to destroy the families of thousands of employees simply by saying, 'We're moving on'."

It is little consolation to the hard-hit blue-collar work force of Akron that the city's overall economy is prosperig. Akron is in transition, not dying. Overall employment is at a record, thanks to new jobs in white-collar and service industries.

A new Holiday Inn and the 19-story office building of Ohio Edison loom over a renovated downtown, and Goodyear has maintained its pillar-of-the community image by announcing plans for a new $75 million "technical center" that will employ mainly engineers, reserchers and clerks.

In addition to Goodyear, the headquarters of Firestone, Goodrich and General Tire are still in Akron.

Thses headquarters, however, are little more than seats of government from which top excutives preside over a far-flung confederacy of subsidiaries and affiliates.

Akron became a rubber center in the first place almost by accident. In 1870, a young, traveling entrepreneur, B. F. Goodrich, obtained local financial backing for a business. Water needed for manufacturing rubber procucts was available.The automobile industry later grew up conveniently to Detriot, not far away.

There is no more reason for the tire companies to be in Akron tlday than for Exxon to have its headquarters in Manhattan.

The tire companies' basic raw material, Asian natural rubber, comes from half-way around the world, and many of the companies' markets are just as distant.

Nearly one half of the 150,000 people who are on the Goodyear payroll work outside the United States.

A substantial amount of its technical research is conducted elsewhere. Since the late 1950s, its experimentation with new tire designs and materials has been based in Luxembourg.

And its sales -- and profits -- also are more and more dependent on what it does abroad, where markets are expanding faster than in the United States.

On Feb. 13, the company announced that its 1978 sales exceeded $7 billion for the first time. Earnings were $3.12 a share. Significantly, about one third of the company's of foreign subsiciaries and affiliates were $62 million -- an 80 percent increase over 1977.

In the tire and rubber business -- as in oil, grain, steel, electronics and aluminum -- the number of companies that can manage such a worldwide presence, and survive and prosper, is small and likely to get smaller.

In their authoritative book on multinationals, "Global Reach," Richard J. Barnet and Ronald E. Muller write of a "concentration and internationalization that has put the world economy under th esubstantial control of a few hundred business ecterprises which do not compete with one another according to the traditional rules of the classic market."

This tendency toward concentration is dramatically evident in rubber and tires.

A handful of giant companies produces the bulk of the 570 million tires sold in 1977 in the noncommunist world. Five are Americanll Goodyear, Firestone, Goodrich, General and Uniroyal. One is Japanese: Bridgestone. Four are European; France's Michelin, England's Dunlop, Italy's Pirelli and West Germany's Continental.

These companies' comination of world markets can be seen from the fact that in 1978, Goodyear produced about one out of five tires in the non-communist world; Michelin sold one tire out of the compainies, which is buttressed by their diversification into chemicals, synthetics, other rubber products, aerospace and telvision stations.

These companies often act almost like governments, carving out spheres of influence, forming alliances when and where it suits their purposes and breaking them to engage in competitive warfare in other parts of the globe.

Goodyear and Michelin, bitter rivals in the retail tire markets of Europe and North America, are partners in a joint industrial venture in Le Havre, France, that produces a strategically important synthetic rubber.

Bridgesone gets technology from Goodyear and makes tires in Japan for the Akron company. Goodyear, in turn, makes tires for Dunlop in Indonesia, and Dunlop makes tires for Goodyear in New Zealand and Rhodesia.

Dunlop and Pirelli combined many of their operations in 1971 "to achieve better global effectiveness through common services, joint research and the combination of resources and commerical know-how."

Some serious forecasters believe that by 1990, most of the world's tires may be produced by there corporations: America's Goodyear, Japan's Bridgestone and France's Michelin.

The developing countries of Africa, Asia and Latin America are doubly dependent on these tire multi-nationals.The companies are both providers of technology and capital for making tires, and customers for their natural rubber.

Goodyear buys more natural rubber than either China or the Soviet Union.

An estimated 20 million people in the equatorial zones depend on the production, marketing and processing of this natural rubber for a livelihood.

"What the multinationals pay for our rubber," observed P. O. Thomas of the Malaysian Rubber Research and Development Board, "is vital to whether many Malaysians can pay for rice today."

Contrary to the impression many Americans gained in the 1960s, rubber is regarded as more essential than ever in tire manufacturing. The advent of radial tires, which for technical reasons cannot be built solely from synthetic rubber, has strengthened this demand.

But the tire companies, with billons of dollars invested in plants to make synthetic rubber products, still have considerable leverage in their long-standing war of nerves with the Asian rubber nations.

While tires may look like easily produced "black donuts," their chemistry and engineering actually is an esoteric blend of a crude agricultural product, chemicals, fabric and delicate steel wires in a product that has to stand up to extremes of heat, cold and strees.

The mastery of this technology is a key source of the multinationals' strength.

Only China, South Korea, Israel and Sri Lanka are manufacturing tires without the aid of one or more of the 10 big multinationals.

And even this may be only temporary independence from involvement with the major companies. Tire executives in Akron say Sri Lanka has expressed interest in cooperation following difficulties with a Soviet-installed tire plant.

The Soviet Union and its East European allies, all buy tire manufacturing technology from the Western companies, even though Soviet Bloc tires have yet to approach the quality of Western tires.

In the developing nations, this dependence on the tire majors is virtually universal. Inevitably, this is a factor in the economic diplomacy of the multinationals.

Goodyear operates the only tire plant in Zaire. Firestone produces all the tires made in Ghana. Dunlop had a Malaysian monopoly until Goodyear moved in in 1972.

In many developing countries, the balance of power between the multinationals and the government is delicate.

Morocco, for example, depends for its tires entirely on the output of the local subsidiaries of Goodyear and General Tire.

This tire supply is critical as Morocco attempts the difficult feat of stabilizing its economy while satisfying the consumer demands of a new ruban class, which has given Morocco the second highest per capital vehicle registration on the continent after South Aftica.

As Morocco's bill for imported food and oil has risen since 1973, King Hassan has been forced to adopt stringent austerity measures to reduce unnecessary imports. Goodyear and General -- two companies which help lower import costs by producing tires locally -- have therefore become more central than ever to Morocco's economic development plans.

Without tires for buses, farm equipment and trucks, the country's economy would come to a standstill.

Yet, in Morocco, as in so many other parts of the world, the alliance between the tire companies and the government is often an uneasy one.

The force driving the companies is the profit motive. The concerns of the governments are broader: the balance of payments, jobs, domestic political stability.

Morocco is a developing country, independent only 22 years, which is still sensitive to the appearance that it is dependent on foreign capitalists. Yet Goodyear and General are controlled from Akron, not Rabat.

These fundamental conflicts set the tone for relations between the companies and the governments today.

Morocco and other developing countries need the companies' technology and managerial skills, but they now have the example of the Organization of Petroleum Exporting Countries to remind them that they, too, have bargaining power.

How the "governments" of the multinationals and the governments of nations adjust to this new situation will affect Akron as well as Rabat.

Next: Multinational archipelago .