At first glance, Ecorse, Mich., appears an unlikely place for a grand experiment.

Aging steel mills dominate the landscape in the 2.2-square-mile community of 11,000, located in a region known as Downriver Detroit. Downriver is typical of many of the so-called "rust bowl" communities that dominate America's once-great industrial heartland. Row after row of small, wood-frame houses stand in the shadows of the mills, home to three generations of steelworkers. Along West Jefferson Avenue, the bars and fast-food establishments are fighting a battle against creeping blight. Crack cocaine dealers have invaded from Detroit, decimating several surrounding neighborhoods.

But look beneath the surface and you will find evidence of a grand experiment unique in recent American history. Three years ago, Ecorse teetered on the brink of economic bankruptcy, the result of a $6 million budget deficit caused by wasteful local spending.

Today, the deficit has virtually disappeared, along with most of ecorse. The Ecorse city government, that is, which has been privatized to the point of near-extinction. "We have created a model city that nobody else in the country has," explains Louis Schimmel, the man responsible for Ecorse's grand experiment. "Some communities have privatized certain functions. I've privatized just about everything. Everything that I could legally."

Ecorse was unique before Schimmel's appearance on the scene Downriver. It was the first Michigan community to be placed in receivership. Chief Wayne County Circuit Court Judge Richard Dunn appointed Schimmel receiver for the troubled community Dec. 3, 1986, after city officials failed to comply with a court order to balance their budget.

Symbolic of the budget crisis was Ecorse's animal control officer, paid $45,000 annually before Schimmel's appearance on the scene. "That's an awful lot for collecting dead dogs," Schimmel said. "I told Judge Dunn I didn't want the (receiver's) job if I had to do what the typical politician has to do, which is make promises and then chase the taxpayers' money to keep them. That's how Ecorse got in the mess that it is in today in the first place."

Schimmel's first act as receiver was to discharge 40 paid political employees. "Cost was not important in Ecorse even though they were near-bankrupt. Having their political buddies, cronies, relatives and friends on the city payroll had become more important than the taxpayer," he said.

Schimmel's second act was privatizing the 34-member Department of Public Works. Motor vehicle maintenance, snow removal, street and sidewalk repairs, tree trimming, water meter reading, weed cutting and a myriad of other activities are now performed by the private sector. For an encore, Schimmel sold the DPW building and the department's equipment. "They're gone. It's going to be difficult if not impossible to resurrect them from the dead," he said.

Garbage collection was already handled privately, but Schimmel renegotiated the contract at a saving of $120,000. The city boat-launching facility was privatized. "The facility lost money under government control but is now turning a profit. Surplus buildings and abandoned city lots were sold to reduce the budget deficit, which has been cut to $1 million.

Michigan law prevented Schimmel from altering Ecorse's police department, but he privatized the pension fund, restoring financial sanity to a system once underfunded by $15 million. Under the fire union contract Schimmel renegotiated, the current full-time force will become a part-time and volunteer department through attrition. "We have a long list of applicants for the new positions. They don't seem to mind that it's not full-time. They just want to work," Schimmel said.

Few Ecorse departments have escaped Schimmel's budget-cutting wrath. The city's work force, once 140, has been reduced by more than 60 percent through privatization. There have been exceptions; the duties of the $45,000 animal control officer were contracted to the neighboring city of River Rouge. "We pay half their costs and both of us save money. $20,000 is still a lot for dead dogs, but half of what we used to pay," Schimmel said.

Not everyone is impressed with Ecorse's grand experiment. Labor unions representing former city employees have criticized the receivership, portraying Schimmel as an economic czar with an abrasive personality. Officials responsible for the $6 million deficit contend the privatization of city services has gone too far.

State Treasurer Robert Bowman, however, has supported Schimmel. Bowman and other Democratic leaders, among them Gov. James Blanchard, may be forced to utilize privatization to resolve a $4.4 million budget deficit in River Rouge. "There isn't a community Downriver where I wouldn't use privatization," Schimmel said. "That includes River Rouge."

For his critics, Schimmel has a ready response. "They knew bankruptcy was coming with that kind of spending, but they didn't want to do a damn thing about it. We did."