Newspaper article The Christian Science Monitor

When a City Loses Its Corporate Moorings ; as Mergers Multiply, Cities Lose Their Business Base, Affecting Local Culture and Charities

Newspaper article The Christian Science Monitor

When a City Loses Its Corporate Moorings ; as Mergers Multiply, Cities Lose Their Business Base, Affecting Local Culture and Charities

Article excerpt

Forget the Red Sox. Boston has suffered a bigger loss this week - at least financially - when Bank of America snapped up the hometown bank, FleetBoston Financial, for $47 billion.

And just last month, the John Hancock Insurance company, another pillar of the city, was sold to a Canadian firm.

Together, the deals mark Boston's entrance into the ranks of American cities that have lost some of their most prominent corporate headquarters.

The loss of a bank headquarters nearly as old as the country is a sign that even top-tier cities aren't immune to consolidation in key industries such as financial services, utilities, and media. In this ever-changing landscape, there's been less corporate emphasis on community in favor of a more global reach.

Still, when a company's headquarters close, thousands of jobs aren't necessarily immediately lost. What America's urban centers can forfeit, though, are key sources of civic leaders and charitable donations.

"This is one of the biggest problems facing cities today," says Otis White of Civic Strategies, a public-policy consulting firm in Atlanta. "What it means is that the source of leadership has to change."

It was once the local telephone company, department stores, newspapers, and banks that had the most to gain when the economy expanded. So their executives were most likely to invest in the local infrastructure and sign up for civic causes that made their hometown a better place to live.

In Atlanta, for example, 60 percent of those serving on public and nonprofit boards were likely to come from those industries, says Charles Heying, an urban studies professor at Portland State University in Oregon.

But the day is long past when Atlanta's mayor could walk into the office of Citizens and Southern bank and ask the owner to help lure the Braves baseball team and build a new stadium. Citizens and Southern was long ago bought up by Nations Bank, the Charlotte, N.C., bank that ate up Bank of America in 1998.

Bank of America's growth into a behemoth with $541 billion in deposits has boosted Charlotte from a Southern backwater to the nation's second-biggest banking hub.

Yet hosting a corporate headquarters isn't necessarily as alluring as it once was, economists say. Leaner, decentralized corporations want fewer people manning the back office. They're demanding more tax breaks and other incentives to stay put. Today's "drive by" CEOs are too busy and don't serve long enough to get involved in civic boards.

Most global companies are less likely to see themselves attached to one community, as in the case of Boeing's decision to abandon its longtime home in Seattle.

"They don't have the same amount of time, energy, or desire to focus on local issues," says David Abbott, executive director of the George Gund Foundation in Cleveland.

Detaching itself from Seattle allowed Boeing to emphasize its status as an international corporation and build some distance from its employees should labor relations get ugly, Mr. Heying adds.

There was no shortage of cities willing to compete for the Boeing prize. And it wasn't just the prestige or Boeing's 500 jobs that prompted Chicago to offer millions in tax incentives and credits.

A headquarters also promises employment for hundreds more high- paid outside professionals ranging from lawyers and accountants to those in public-relations and advertising firms. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.