Seven years after wooing Norfolk Southern, Atlanta may lose its HQ in merger
Credit: arvin.temkar@ajc.com
Less than seven years ago, Georgia and Atlanta leaders celebrated a major coup: convincing Norfolk Southern to move its headquarters to Midtown Atlanta from Virginia.
The railroad’s then-CEO promised to create or relocate 850 jobs to a gleaming, $575 million building on West Peachtree, joining thousands of existing Atlanta employees.
But now, that Atlanta headquarters — and the 3,000 jobs it represents — could be at risk.
Norfolk Southern, an Eastern railroad, and its Midwest/Western counterpart, Union Pacific, confirmed Thursday they are in “advanced discussions” about a possible merger into what would be the country’s largest railroad.
Union Pacific — based in Omaha, Nebraska — has more than double the market value of Norfolk Southern and about 12,000 more employees.
A railroad merger is no sure thing and would involve a gantlet of federal regulatory approvals.
But unions representing some of Norfolk Southern’s headquarters employees are worried about what this could mean for their members — some of whom just settled into Atlanta a few years ago.
Credit: arvin.temkar@ajc.com
‘A lot of anxiety and concern’
Many of the train dispatchers who staff the company’s Network Operations Center moved their families to Atlanta to keep their roles, explained Ed Dowell, president of the American Train Dispatchers Association.
His organization represents about 270 Norfolk Southern dispatchers; he estimates between 150 and 200 moved here from field offices across the country.
Unlike crewmen or train signalmen who staff the physical railroad infrastructure, operations and clerical employees often face job cuts during railroad mergers as the companies look for savings.
The Transportation Communications Union/International Association of Machinists represents Norfolk Southern and Union Pacific’s clerical workers, from accounting to payroll and customer service, including several hundred in Atlanta.
Some of them also recently relocated here, confirmed Matt Hollis, its national vice president. And his union has “strong concerns” about the merger idea.
“Anytime there is a forced relocation, there are dynamics that are at play for individuals that corporations simply can’t factor in or don’t factor in when they’re making their decisions. Kids in schools, spouses having jobs, families having roots,” he said.
His members just have “way more questions than answers at this point,” Hollis said.
Credit: Miguel Martinez
Norfolk Southern declined to respond to The Atlanta Journal-Constitution’s questions about the implications of a possible merger on its headquarters.
Among Dowell’s members, “there’s been a lot of anxiety and concern” about the possibility. “And that’s not good to have in the environment that our members work in.”
Dispatchers are responsible for coordinating simultaneous train and crew movements, he said.
“When you’re in a situation where, even for a split moment, you are thinking about something other than the task at hand, it clearly can be an unsafe situation.”
How it happened
Bert Brantley was chief operating officer at the Georgia Department of Economic Development in 2017 when he got a call from Norfolk Southern about possible corporate relocation.
The Virginia-based railroad already had significant operations in Atlanta — including a crew training center in McDonough — but were interested in expanding them.
The team had to keep it “very confidential,” recalled Brantley, who is now the president and CEO of the Savannah Chamber of Commerce.
It was an especially complicated deal, he recalled, because the railroad wanted to use funds from the sale of a piece of downtown Atlanta property to finance the headquarters.
Ultimately they pulled it all off with close coordination between Republican state leaders and Democratic city leaders, he said.
In terms of corporate location deals, “It was as big as any that we worked on.”
“As a city founded as the terminus of a railroad line, it means so much for Atlanta to have Norfolk Southern choose to locate their headquarters here,” Eloisa Klementich, president & CEO of Invest Atlanta said at the time.
It was a “nice win for everybody involved,” Brantley said, and the company has been an involved corporate citizen since.
However, Rick Paterson, an industry analyst with Loop Capital, told the AJC that if a merger went through, Atlanta could lose that headquarters and the company would probably sell its massive Midtown building.
“They’re not going to keep a building for a staff that’s 25% of what it was,” he said.
Train operations would likely be centrally controlled from Omaha and executives would leave Atlanta, Paterson predicted. Sales, marketing and back-office functions like IT could be “gutted.”
Norfolk Southern’s Atlanta presence “would be at best downsized dramatically.”
The railroad’s board, which will have to approve any merger proposal, has “a fiduciary responsibility to investors to maximize shareholder value,” Paterson said. “So if a big enough number is thrown at them (by Union Pacific), they’ll have little choice but to accept it.”
Brantley said any dampening of Norfolk Southern’s presence, in terms of jobs or community involvement, would be a loss.
However, “that’s out of our control. It’s not something we can predict.” But “economists will tell you that if there’s a hole, something will fill it,” Brantley said.
“It may not be as great, but if it were to be the case, we’d also have an opportunity to think about what would replace them,” he said.
“But that’s … too premature to worry about at this point."
About the Author
As a business reporter, Emma Hurt leads coverage of the Atlanta airport, Delta Air Lines, UPS, Norfolk Southern and other travel and logistics companies. Prior to the Atlanta Journal-Constitution she worked as an editor and Atlanta reporter for Axios, a politics reporter for WABE News and a business reporter for the Arkansas Democrat-Gazette.
