Does Your City Attract Corporate Relocations?

Atlanta Tops America’s 50 Hottest Cities for Expansions and Relocations

The hope going into 2004 is that the U.S. economy is on the way up after nearly four years of going in the other direction. Many of the economic indicators during the last quarter of 2003 certainly suggest that better days are on the horizon.

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If the economy is headed in the right direction, it will be met with a giant sigh of relief by companies, their employees, as well as by the cities and states in which they’re located.
Perhaps those expansion projects, put on the back burner until better days arrive, will be brought to the forefront. Perhaps those companies that have spent the past several years in a hiring freeze will begin to experience a thaw.

Many cities will reap the benefits of business expansions if 2004 is the year that the U.S. economy resumes robust growth. But cities that enjoyed an outstanding 2003, when the economy was still lagging, have set themselves up for an even better ’04.

For many months, those cities have focused on shedding the effects of a sluggish economy. Last year, their efforts paid off.

Expansion Management surveyed 70 of the industry’s most prominent site selection consultants in order to find out which cities their clients found the most attractive when it came to selecting an expansion or relocation site in 2003.

The consultants, whose identities remain confidential, were asked to rank the best of the 370 metropolitan statistical areas (MSAs). The result is our sixth annual ranking of America’s Hottest Cities for business relocations and expansions.

This year’s honor as America’s Hottest City goes to Atlanta, which rebounded from the downturn in the economy to secure a number of high-profile relocation projects in 2003, including an impressive string of corporate headquarters relocations.
Nashville, which also boasted of several headquarters relocations during the past year, was No. 2. Jacksonville, Fla. (a three-time Hot Cities winner, including the past two years), Kansas City, Mo., and Memphis, Tenn., rounded out the top five.

Both Atlanta and Nashville have targeted corporate headquarters projects during the past 18 to 24 months. Both metros are logistically advantageous to just about any company in any industry; Atlanta’s Hartsfield-Jackson International Airport is in the midst of a $6 billion expansion that will improve passenger and cargo service, and Nashville is one of only a handful of cities in the country that has three interstates running through it.

Both metros are using their colleges and universities to help improve the business climate, and both believe that their brightest days are still ahead of them.
The Atlanta metro led the nation in year-over-year non-farm employment growth last year, according to the Bureau of Labor Statistics. This year’s forecast is for the metro to add between 45,000 and 55,000 net new jobs.

“Companies need the ability to reach their customers and markets globally,” said Hans Gant, senior vice president of economic development for the Metro Atlanta Chamber of Commerce. “An attractive quality of life and world class universities help attract and retain talent that companies need. Companies want to be in an area where the economy is robust and offers growth potential. Atlanta has all of these advantages.”
Janet Miller, senior vice president of economic development for the Metro Nashville Chamber of Commerce, said there is a “pervading energy” that indicates the city has become a force on the U.S. business scene.

“We are truly a city on the rise,” she said. “Every corporation that makes a decision to locate here reinforces that energy.”

Corporate Headquarters Lead the Way in Atlanta
Atlanta is focused on attracting companies in numerous industry clusters. During the past 18 months, 32 companies with 100 or more employees have expanded or relocated in the metro, and scores of other companies with less than 100 employees have done the same.

First and foremost is the effort to attract corporate headquarters projects, whether those headquarters are worldwide-based, U.S.-based, Latin America-based, etc.
“Atlanta has emerged as a major headquarters business center in the United States,” Gant said. “We’ve been successful in attracting European companies that have relocated their U.S. headquarters.”

Newell Rubbermaid announced early last year that it is relocating its corporate headquarters from Freeport, Ill. The project will bring 900 new jobs to Atlanta, including the relocation of 100 of the company’s top executives.
The first 60 employees will begin operations in Atlanta later this year.

The Fortune 500 company, which manufactures houseware products, plans to build a 300,000 square foot campus that will house both the corporate offices and a corporate training center.
Newell Rubbermaid considered sites in Chicago, Dallas, Baltimore and Charlotte, N.C., before settling on Atlanta.
“Atlanta won in a very competitive process with its projected growth, living environment, climate, location and educational opportunities,” said Joe Galli, president and CEO of Newell Rubbermaid.

Other new headquarters projects include Cooper Wiring Devices, a division of Cooper Lighting, which is relocating from New York state, bringing 115 new jobs; the Netherlands-based Hagemeyer North America, a wholesaler electrical parts distributor, which relocated its headquarters from South Carolina, bringing 250 jobs; and Acuity Specialty Products Group, which consolidated its headquarters in Atlanta resulting in 100 new jobs.

Atlanta-based companies also announced expansions.

Cendian, a chemical third-party logistics (3PL) provider, doubled its work force during the past 18 months.
Merial doubled its work force during the past two years, with employment topping 1,000, after first relocating its North American headquarters to Atlanta, then putting its global operation in the city.
UCB Pharma completed a 110,000 square foot, 45-acre headquarters facility to accommodate an expansion.

More Than Just HQs

But Atlanta has not put all its eggs in one basket. Aside from the numerous headquarters projects, the metro has also attracted technology centers, distribution and manufacturing operations, and transportation and logistics facilities.

“A number of big box regional distribution centers, high-end back office operations, and customer service and data centers have located in Atlanta,” Gant said. “We’ve also had a lot of expansions in the service sectors, such as consultants, legal services and healthcare.”

Computer Generated Solutions opened a technical call center in 2003, employing 250 workers; New York Life located its data operations center in the metro, with a projected work force of 140; and telecommunications company Level 3 Communications relocated an operations center from Massachusetts, with a targeted work force of 500 — 300 of which will be transferees.
The metro wants to leverage off its logistical assets, as well. Companies can ship products or executives to almost any point on the globe from Hartsfield-Jackson International Airport, and Delta and UPS are both based in Atlanta.

Thanks to its logistical advantages, the metro has the largest concentration of 3PLs in the country — 40 of the leading 3PLs have their headquarters in Atlanta. Plus, the Georgia Tech Logistics Institute is one of the leading logistics industry research centers in the world.
“Atlanta has a lot of intellectual capital in logistics business leadership,” Gant said.

In distribution and manufacturing, Hagemeyer located a 300,000 square foot distribution center with 110 employees early last year, while HH Gregg sited a 273,000 square foot DC, employing 150 workers.

Schneider National located a new logistics center from Wisconsin, employing 100 workers initially with a projected work force of around 700; Knight Transportation located a truck terminal facility from Kansas, employing about 150; and AirTran announced plans for a new hangar facility in metro Atlanta, adding 100 new jobs.

In an effort to continue to diversify its economy, Atlanta has spent the past two years building its biotechnology assets. The University of Georgia, Georgia Tech, Georgia State University and Emory University each have leading bioscience research institutes. Atlanta is also home to the Centers for Disease Control and Prevention.

The metro also wants to enhance its reputation from an international standpoint. It wants to position itself as the next gateway to Latin America, Gant said. To that end, air cargo and passenger service between Atlanta and Latin America is growing.

“What has been successful for metro Atlanta and Georgia is that we’ve always invested in our infrastructure and universities,” Gant said. “These investments have been a principle part of our strategy and have been the impetus for the growth we’ve had.”

Nashville Scores Major Headquarters Relocations

Like Atlanta, Nashville had an extremely successful year convincing companies to relocate their headquarters there. Four major projects were announced, which will eventually bring more than 2,000 high-paying jobs to the Middle Tennessee region.
The metro cites its 85,000 college students in numerous colleges and universities, cost factors and logistical advantages as its major strengths.

Miller said companies look to Nashville because of the cost savings and efficiencies associated with the metro.

“During a down economy, people look for these qualities in a community,” she said. “The location of Nashville saves companies money on air travel, and logistics and operating costs.”

The latest of the corporate headquarters projects is Louisiana-Pacific Corp., which announced in September its intention to relocate to Nashville from Portland, Ore.
Louisiana-Pacific, a supplier of commodity and specialty building products serving retail, wholesale, home building and industrial markets, will lease 80,000 square feet in downtown and bring 200 executives within the next 18 months.
Nashville won out over sites in Portland, Charlotte and Richmond, Va.

“Nashville is an excellent fit for our company as we concentrate on growing our business,” said Mark Suwyn, chairman and CEO of Louisiana-Pacific. “It’s closer to our mills, customers and financial shareholders, while offering a good, affordable quality of life for our employees and a positive business climate.”

The company will also locate a research and development center in suburban Nashville.

Earlier in the year, within days of each other in May, Nashville scored a headquarters trifecta with the announcements that Asurion, Quanta and Caremark were relocating to the metro.
Asurion, a provider of enhanced services for the wireless communications industry, will relocate its headquarters from San Mateo, Calif., bringing 1,600 jobs during the next three years. The privately held company, with revenues estimated at $250 million, serves 10 million subscribers with roadside assistance programs, handset and data device insurance programs, and warranty management plans.

Quanta, the world’s largest manufacturer of notebook computers, opened its server manufacturing and distribution North American headquarters in September.

The Taiwan-based company, with $4 billion in sales, expects to initially employ 50 people in Nashville, with an expectation of growing that number to 500 within three years.
Quanta considered sites in Mexico and elsewhere in the United States but chose Nashville because of the proximity to markets and its customers, including Dell, Compaq, Gateway, Apple and IBM.

Healthcare company Caremark Rx will relocate its corporate headquarters from Birmingham, Ala., this year, adding about 50 high salary jobs. With 4,800 employees and 2002 revenues of $6.8 billion, Caremark is one of the largest pharmaceutical services companies in the country.

“Nashville is widely recognized as a center of excellence for the healthcare industry and will offer our company and employees a high quality of life and a healthy business environment,” said Mac Crawford, chairman and CEO of Caremark.
Crawford noted that Nashville is home to more than 60,000 healthcare professionals and 18 publicly traded healthcare companies.

Healthcare services is one of Nashville’s biggest employers and the metro expects to continue to grow that industry in the future, Miller said.

A major reason why Nashville enjoyed such a good year in attracting headquarters projects was its current roster of CEOs, who went to bat for the city.

“They have the ability to sell this town,” Miller said. “In the past, there was always a concern about confidentiality issues. But we thought it would be worth the risk because we have some great CEOs. There were no breaches of confidentiality, and the CEOs closed the deals that no professional economic developer could do alone.”

Other Hot Cities

Other Hot Cities enjoyed numerous business expansion and relocation successes during the past year.

Tulsa, Okla. (No. 15) and Seattle-Bellevue-Everett, Wash. (No. 19) will both reap the benefits of one of Boeing’s largest-ever enterprises, the 7E7 Dreamliner passenger airplane.
Boeing will manufacture wing components at its Tulsa facility because of the productivity and quality track record of the employees there, along with the excellent skills of those workers, according to the company.

Boeing announced in December that it selected Everett as the final assembly location for the 7E7. The decision came after a six-month evaluation of proposals from across the United States, including sites in Alabama, Michigan and North Carolina.

Boeing evaluated the proposals against criteria designed to find the final assembly location that would best support the 7E7 business plan.

“Many states submitted extremely competitive proposals and many factors weighed into the decision,” said Mike Bair, senior vice president of the project. “But it’s clear that the best solution for Boeing and the 7E7 is to place final assembly in Everett.”

In May, Toyota launched production of its first V8 engines manufactured outside of Japan at its facility in Huntsville, Ala. (No. 44). About 300 workers will produce 120,000 engines annually for the Tundra.

Earlier, Toyota announced that it would build an $800 million assembly plant in San Antonio, Texas, to produce the Tundra.

Peering into the Future

Success in 2003 doesn’t guarantee success in 2004 and beyond. Cities have to continually be aggressive in their recruitment of companies.

“We have to stay one step ahead of everyone else,” Metro Atlanta’s Gant said. “We have to be focused on areas where there is the potential of long-term, sustained economic growth. From a long-term standpoint, we have to make sure that the investment in our infrastructure today meets the needs of tomorrow.”

Metro Nashville’s Miller said it is important to remember that cities compete against each other for economic expansion. Nashville officials are probably talking to companies in Atlanta and vice versa.

While continuing to attract companies to Nashville, the metro also plans to make sure that companies already located there are happy.

“I’m knocking on doors in other cities; we’re knocking on their doors.” Miller said. “We’re in the marriage business, not the dating business. We want it to be a long-term commitment between company and city.”

— Ken Krizner is managing editor of Expansion Management. He can be reached at [email protected].

The NAM Site Selection Network
AMERICA’S 50 HOTTEST CITIES

1. Atlanta, Ga.

2. Nashville, Tenn.

3. Jacksonville, Fla.

4. Kansas City, Mo.-Kan.

5. Memphis, Tenn.-Ark.-Miss.

6. Colorado Springs, Colo.

7. Phoenix-Mesa, Ariz.

8. San Antonio, Texas

9. Oklahoma City, Okla.

10. Chicago, Ill.

11. Norfolk-Virginia Beach-Newport News, Va.-N.C.

12. Richmond-Petersburg, Va.

13. Raleigh-Durham-Chapel Hill, N.C.

14. Denver, Colo.

15. Tulsa, Okla.

16. Austin-San Marcos, Texas

17. Dallas, Texas

18. Orlando, Fla.

19. Seattle-Bellevue-Everett, Wash.

20. Louisville, Ky.-Ind.

21. Greenville-Spartanburg-Anderson, S.C.

22. Little Rock-North Little Rock, Ark.

23. St. Louis, Mo.-Ill.

24. Greensboro-Winston-Salem-High Point, N.C.

25. Birmingham, Ala.

26. Tampa-St. Petersburg-Clearwater, Fla.

27. Albany-Schenectady-Troy, N.Y.

28. Pittsburgh, Pa.

29. Boston, Mass.-N.H.

30. Charlotte-Gastonia-Rock Hill, N.C.-S.C.

31. Washington, D.C.-Md.-Va.-W.Va.

32. Baltimore, Md.

33. Rochester, N.Y.

34. Fort Worth-Arlington, Texas

35. Tucson, Ariz.

36. Goldsboro, N.C.

37. Roanoke, Va.

38. Buffalo-Niagara Falls, N.Y.

39. Reno, Nev.

40. Salt Lake City-Ogden, Utah

41. Houston, Texas

42. Flagstaff, Ariz.-Utah

43. Charleston-North Charleston, S.C.

44. Huntsville, Ala.

45. Albuquerque, N.M.

46. Indianapolis, Ind.

47. Portland-Vancouver, Ore.-Wash.

48. Boulder-Longmont, Colo.

49. Columbia, S.C.

50. Auburn-Opelika, Ala.

– Cincinnati, Ohio-Ky.-Ind.

– Columbus, Ohio