Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Wednesday, June 15, 2022

Next Level Clustering of Business away from the Midwest

Around 2015, there were a number of instances of corporate headquarters moving to the South, such as Mercedes USA moving from New Jersey to Atlanta.  

Atlanta and Dallas were particularly successful in gaining large corporate or regional headquarters, and sadly in locations that were minimally served by transit.

Although at the same time, there has been a number of examples of corporate headquarters moving from suburban locations back to the center city, although the impact of covid on people actually coming to work versus working from home has countered that in many instances. 

-- "Could bringing premier regionally headquartered business enterprises to the Pennsylvania Avenue Corridor be key to its renewal and revitalization?," 2014
-- "A lesson that seeing is believing: Panasonic's new building in Newark, NJ as an example, positive and negative, in businesses coming back to the city center," 2015
-- "Businesses moving back to the center: not a universal trend," 2015
-- "DC, Transformational Projects Action Planning, and the Baltimore-Washington Maglev project," 2021

Relatedly is all the discussion about firms moving from California/Silicon Valley to Texas ("Companies are rapidly leaving California, study finds. Here’s where they are going " KXAN-TV), and how industries going through technological change shift their locations as well (e.g., electric vehicle battery and car/truck production to Arizona, Texas, Georgia, and potentially Oklahoma, etc.).

Although given the reality of Western drought and how manufacturing tends to require great amounts of water, I would think the Midwest has a long term competitive advantage in terms of access to water supplies. 

In May I wrote about Boeing relocating its headquarters to Northern Virginia, from Chicago, when it had already been moved from Seattle, where the company was founded and still has its largest manufacturing operations ("Boeing to move "headquarters" to Northern Virginia ").

Then a bit more than a week ago, Raytheon, another large defense manufacturer, announced it was also moving its HQ to Northern Virginia ("Raytheon will move headquarters to Arlington ," Washington Post), bringing all of the largest companies to the DC area, all but Lockheed Martin (in Montgomery County, Maryland) in Virginia.

San Antonio as a developing automotive cluster.  Around that time I came across an interesting article about the development of Greater San Antonio becoming a corporate R&D cluster, building out of industrial plants for Toyota, Navistar, and others ("Driving force: San Antonio picks up speed in auto industry," San Antonio Express-News, access with printfriendly).  

Manufacturing has moved South and West because most of the states have labor laws that make unionization of the workforce difficult, so they can offer lower wages compared to plants in the Midwest.  Over time, corporate functions are following.

The article is long and detailed, and illustrates how corporations can shift their "centers" as they develop new centers of business concentration. 

Caterpillar moving to Texas.  Yesterday's announcement that Caterpillar, the heavy equipment manufacturer once based in Peoria, Illinois, having shifted to Suburban Chicago in 2017 ("Do tax incentives pay off? : Illinois; Tennessee; Rosslyn + "The Airport Access Factor"," ) is now moving to Irving, Texas ("Caterpillar to move headquarters to Texas, marking second major corporate departure from Illinois in 6 weeks," Chicago Tribune).  

Although they do have various manufacturing operations in the state, Illinois remains much more significant. And the number of employees, 230, isn't huge.

Conclusion.  I'd say it's early to draw overarching conclusions but the trends do not look good for center cities (especially with the post-covid shift to working from home) generally and in the Midwest specifically.  Although Midwestern states with ample water supplies ought to be putting that front and center in the economic development and business recruitment positioning.

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7 Comments:

At 10:22 AM, Anonymous Anonymous said...

Crazy. Chicago and Illinois have gotta cut their taxes drastically to compete. What a mess!

 
At 12:19 PM, Blogger Richard Layman said...

This isn't an illustration of the thesis exactly, but it is an illustration of the ongoing movement of corporate headquarters from where the company originated, in this case Kellogg's "cereal" company, which was founded in Battle Creek, Michigan.

Just like how Caterpillar moved from Peoria to Suburban Chicago, and now is moving to Irving, it could be that Kellogg is starting a similar process.

Kellogg to split into 3 companies, move corporate HQ from Battle Creek.
https://www.detroitnews.com/story/business/2022/06/21/kellogg-split-into-3-companies-move-corporate-hq-battle-creek/7685675001/

These kinds of companies, as they grow and become more global, find it harder to attract talent to "out of the way" locations.

Then again, I've always wondered if Motown Records lost its mojo because it moved from Detroit to Los Angeles?

 
At 5:34 PM, Anonymous h st ll said...

Wealthiest man in the state moves himself, companies to FL

https://www.chicagotribune.com/business/ct-biz-ken-griffin-chicago-hedge-fund-moving-miami-20220623-6ye6m7rsznempijtp7uj2kgbfa-story.html

 
At 9:53 PM, Blogger Richard Layman said...

Chevron to Cut Back in California, Remain Based in State

https://www.wsj.com/articles/chevron-to-downsize-in-california-remain-based-in-the-state-11656103820

6/24/2002

The second-largest U.S. oil company said it would remain based in California, its home state for more than 140 years, but will be leaving its Chevron Park campus in San Ramon, Calif., its global headquarters for two decades.

Chevron said it would cover moving costs for employees who voluntarily opt to move to Houston, as it determines the extent to which it will reduce its staffing in the Golden State. It said it is looking for a new, smaller space to lease in San Ramon, in the greater San Francisco Bay Area, and expects to move from its existing headquarters in late 2023.

Chevron’s presence in Houston, where it occupies the former Enron Corp. headquarters in the heart of downtown, has been growing in recent years, while its footprint in California has been shrinking. The Houston office now employs nearly 6,000 people, roughly three times as many as the population of the California headquarters, which has been declining after the company began a reorganization in 2019.

 
At 9:58 PM, Blogger Richard Layman said...

"Ken Griffin Moving Citadel From Chicago to Miami Following Crime Complaints"

https://www.wsj.com/articles/ken-griffin-moving-citadel-from-chicago-to-miami-following-crime-complaints-11655994600?mod=article_inline

6/23/2002

https://freebeacon.com/latest-news/heres-how-much-tax-revenue-illinois-will-lose-from-citadels-decision-to-cut-bait/

"Here’s How Much Tax Revenue Illinois Will Lose From Citadel’s Decision To Cut Bait"

"Chicago has felt the impact of Ken Griffin’s charity. Now we’ll feel the impact of his exit. "

https://www.chicagotribune.com/opinion/commentary/ct-opinion-ken-griffin-citadel-exit-chicago-miami-20220623-7c4utn4exrf6taetlqvjazeoqy-story.html

It can be argued that many of the reasons for these relocations are beyond the control of their communities. Citadel’s decision, however, was hardly unforeseen or unavoidable; rather, it was a story of “change course” or else. Griffin, a Florida native who founded Citadel in Chicago after graduating from Harvard University, methodically grew his hedge fund to investment prominence and later established Citadel Securities, which is now one of the world’s largest market-makers.

Over the past 30 years, Griffin has become one of Chicago’s most significant employers and civic leaders. But during a speech at the Economic Club of Chicago in 2013, Griffin vehemently criticized Illinois’ political failures that resulted in broken schools, fiscal fragility, rising crime and a declining tax base. And in front of the same group in 2021 — almost a decade later — Griffin foreshadowed a change if these civic problems continued to go unaddressed. ...

All told, Griffin has donated roughly $1.5 billion over the years to a variety of institutions and causes, giving well over a third of that total — over $600 million — right here in Chicago.

Suffice to say, Citadel’s move will be another big setback for Chicago. Beyond the loss of good, high-paying jobs, significant tax revenue and the broad economic impact of the company, there is not another person who has had as large an impact on the city’s cultural and civic vitality — and on Chicagoans’ quality of life — as Griffin over the last 30 years.

 
At 10:00 PM, Blogger Richard Layman said...

Impact of conservative politics in Southern states on companies ability to recruit, plans to relocate.

TheStreet: California Companies Moving to Texas Now Have to Make a Choice.

https://www.thestreet.com/investing/after-roe-will-big-tech-from-california-keep-moving-to-texas

6/24/2022

 
At 6:41 PM, Blogger Richard Layman said...

"Specialty metals producer Allegheny Technologies moves headquarters to Texas, changes name"

https://www.post-gazette.com/business/pittsburgh-company-news/2022/06/22/specialty-metals-allegheny-technologies-inc-moved-headquarters-six-ppg-place-pittsburgh-to-dallas-texas-name-change-ati/stories/202206220132

Specialty metals producer Allegheny Technologies Inc. has moved its headquarters designation from Six PPG Place in Downtown Pittsburgh to Dallas, Texas.

The announcement was made unceremoniously in a filing with the U.S. Securities and Exchange Commission.

The filing also noted that the company had shortened its name to ATI Inc.

“We adopted the name most of you know us by because while the challenges we solve are difficult, our name doesn’t have to be,” the company said on its website.


"ATI’s relocation to Dallas is a blow to Pittsburgh’s self-esteem but not necessarily Pa.’s coffers "

https://www.post-gazette.com/business/pittsburgh-company-news/2022/06/27/ati-allegheny-technologies-pittsburgh-dallas-headquarters-relocation-impact-renamed-specialty-metals-manufacturing-robert-wetherbee/stories/202206240098

ATI spokeswoman Natalie Gillespie said last week that the company was “committed to maintaining a strong presence in Pittsburgh” and that the headquarters move would have little impact on the company’s 1,500 employees in Western Pennsylvania, none of whom are being asked to relocate, she said. ....

One area that could suffer from ATI’s headquarters departure is charitable giving. Corporations generally spend more philanthropically in their hometown.

 

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