THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Thursday, October 24, 1996 TAG: 9610240326
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY MYLENE MANGALINDAN, STAFF WRITER
LENGTH: 111 lines
Hampton Roads could suffer economic shocks and bruised prestige well beyond the 300 jobs it would lose if Norfolk Southern moves its corporate headquarters, experts say.
Business leaders were stunned by the news that Norfolk Southern Corp.'s chairman, David R. Goode, offered to consider moving his company's headquarters to Philadelphia as part of its $9.15 billion bid for Conrail.
Such an action would mean the loss of Hampton Roads' sole Fortune 500 headquarters. And business leaders say it's difficult to overstate the significance of Norfolk Southern's presence to the community and all the intangible benefits that entails.
Putting the headquarters on the table is seen as a potential concession to the Conrail board of directors.
The impact of its departure would ripple through the local economy, from the loss of 300 staff jobs to the outside accountants it employs to its United Way contributions.
As a ``good corporate citizen,'' the company and its employees' participation reverberates throughout the region.
``The main loss to the area would be status,'' said David Garraty, an economist and professor at Virginia Wesleyan College. ``That's our only Fortune 500 company. That would be a shame for it to leave, especially when we're trying to get more to move here.''
A city's stable of Fortune 500 companies distinguishes it from other major metropolitan areas.
``That is something that is of value to us because it put us on the map in respect to other cities that also have headquarters of large corporations,'' said John W. Whaley, chief economist at the Hampton Roads Planning District Commission. Richmond, though a smaller metropolitan area than Hampton Roads, boasts seven Fortune 500 corporate headquarters.
Most economists downplayed the direct economic effect of a Norfolk Southern move. The region has absorbed and bounced back from the loss of 35,000 defense sector jobs at the height of military defense downsizing, Whaley said.
In this case, only the wages and salaries of 300 employees would be lost immediately. The 1,500 workers the company employs at its coal yard and rail yard would probably be unaffected.
But the loss of the company's headquarters would be felt outside its downtown office tower, economists and others say.
Whaley estimated that Hampton Roads could lose a total of about 900 jobs, or two jobs in the economy for each of the high-paying executive jobs moved by Norfolk Southern.
Local hoteliers would lose business from travelers who come to meet with the company and then stay for a few days of vacation. Economic development officials would lose a corporate citizen that helps sell the region to prospective clients. And expanding companies like to see other Fortune 500 companies in areas they move to, said Donald Maxwell, Virginia Beach's economic development director.
The greatest impact, perhaps, would be felt in the civic leadership that Norfolk Southern provides. Its social and financial sponsorship of festivals and the arts and cultural community have far-reaching effects, said Robert Smithwick, former development director of Norfolk.
In addition, several company employees have taken leading sponsor roles in Virginia Opera, the Chrysler Museum, Nauticus, WHRO, the Virginia Symphony and others.
Former Chairman Arnold B. McKinnon has served on the Old Dominion University Board of Visitors. John Turbyfill, former vice chairman, has served on the board of the Virginia Stage Company and held leadership roles in the board that oversees Nauticus.
Goode, Norfolk Southern's chairman, also has been a strident and vocal proponent of regionalism. He was a driving force behind the genesis of the Hampton Roads Partnership, a public-private group that aims to set a regional economic agenda. Goode is co-chairman of the group.
Even the state's leaders were shaken by Goode's announcement.
``We hate to lose the corporate headquarters of any company that is a Virginia company, especially one that is an excellent corporate citizen like Norfolk Southern,'' said Robert Skunda, secretary of commerce and trade.
But Skunda indicated that Virginia hasn't thrown in the towel yet.
``I would not take the statement that David Goode made in his letter to the Conrail board as a fait accompli,'' he said of Goode's offer to move the headquarters to Philadelphia. ``It's clear that this thing is an unfolding event.''
Norfolk Southern's announcement calls to mind memories of Sovran Financial Corp., a Norfolk-based banking company with strong roots in the region that left in the early 1990s.
Several influential positions in the Sovran management were shifted to Atlanta after Sovran merged with the Atlanta-based bank holding company Citizens & Southern Corp. in 1989.
When C&S/Sovran Corp. became part of Charlotte-based NCNB Corp. two years later, many of the senior managers still in Norfolk were transferred or let go. Hundreds of well-paying jobs in the company's marketing, accounting and personnel departments were eliminated.
Roanoke experienced similar withdrawal when it lost Norfolk & Western Railway's headquarters after the railroad merged with Washington-based Southern Railway Co. in 1982 and set up the new Norfolk Southern in Norfolk.
Many hope the loss of Norfolk Southern's Hampton Roads headquarters can be prevented. Others are keeping a wait-and-see outlook if the move takes place.
``It certainly will have an impact on the future of Hampton Roads,'' said Barry DuVal, president of the Hampton Roads Partnership. ``It's too early to articulate the extent of that impact.'' MEMO: Staff writers Tom Shean, Lon Wagner and Christopher Dinsmore
contributed to this story.
MORE ONLINE
Additional material from The Virginian-Pilot and the Internet, including
stock updates and Norfolk Southern Chairman David R. Goode's letter to
Conrail's board of directors, is available through Pilot Online's
Business page at http://www.pilotonline.com
Norfolk Southern has good chance of winning war for Conrail/A11
[For a related story on the impact on the region, also see page A1.]
KEYWORDS: RAILROAD CONRAIL CSX NORFOLK SOUTHERN BIDDING
WAR REGION MERGER by CNB