New CEOs, building boomlets, airport agonies and a blockbuster media deal were among the big business stories of 2016 in metro Atlanta.
Here are the top 10 (plus one) covered by AJC economy reporters during the year:
Turnover at the top
Two of Atlanta’s most iconic companies announced leadership changes this year.
Delta Air Lines promoted veteran exec Ed Bastian to the CEO post, replacing Richard Anderson, who retired to his home state of Texas after a fruitful decade at the controls. Coca-Cola said James Quincey will become CEO next May when Muhtar Kent retires after a 10-year run that’s seen the beverage giant buffeted by the declining popularity of soda.
Both Bastian and Quincey were heir apparents, so the top-echelon moves generated little drama — so far at least.
The same couldn’t be said at Hartsfield-Jackson International, one of the region’s biggest economic drivers.
Atlanta Mayor Kasim Reed in May abruptly fired Miguel Southwell, who’d been general manager only about two years. The two traded public barbs over the reason, with Southwell’s lawyers claiming he was the victim of an over-controlling mayor and Reed retorting that the ousted airport chief was only trying to “rescue what remains of his career.” But they later agreed to drop the dispute. Southwell will get about $85,000 in job transition benefits from a settlement with the city, which owns and operates the airport.
Reed named airport finance exec Roosevelt Council as interim GM and has tabbed him for the permanent post, pending city council sign-off.
Midtown boom keeps booming
Midtown’s rise as a technology hub accelerated in 2016, as it landed a slew of corporate expansions that will bring thousands of new white collar jobs to the city.
NCR announced plans for an innovation lab and a second phase of the headquarters campus that is currently under construction. By the end of the decade, NCR — which is ditching its current HQ in Gwinnett County — expects to employ more than 5,000 workers in Midtown.
This month, Atlanta-based Portman and Georgia Tech broke ground on a 21-story tower known as Coda. It will be the second phase of Technology Square, with the university as anchor tenant and space for the private sector.
Kevin Green, who leads the Midtown Alliance, said 22 active construction projects are underway around Technology Square and will house thousands of new apartment residents and office workers. Just this month, real estate firm Selig Enterprises announced a mixed-use project along West Peachtree Street that will include the area’s first speculative office tower since 2010.
Warehouses ‘R’ us
From the air, parts of metro Atlanta these days look like a circuit board, with giant white squares strung along highway corridors. It’s an apt analogy since they are the flat roofs of gigantic warehouses, a sector of commercial real estate whose growth is being fueled by online shopping.
A burst of mega-warehouse construction around metro Atlanta has been driven partly by e-commerce and merchants’ need to deliver products quickly. As an air and highway hub, metro Atlanta is an inviting location.
Shifts in manufacturing have also had something to do with it, as smaller, just-in-time factories need temporary storage for parts and materials.
Amazon Fresh launched a warehouse in Gwinnett and UPS is developing a massive ground hub near the Fulton County Airport. Other companies opening big distribution centers in the area included apparel-maker Tory Burch and Home Chef, the meal delivery service that announced a 1,200-job project in DeKalb County.
New warehouses tend to be larger, with wider spans for easier movement of products. That’s made many older ones obsolete and created opportunity for real estate developers, who sometimes adapt the older buildings into loft office space.
The great gasoline hunt
Colonial Pipeline, operator of 5,500 miles of crucial pipelines across the eastern U.S., used to be one of the most important local companies you’d never heard of.
But everybody with a gas-burning car learned Colonial’s name in September, when repairs on a leak in one of the Alpharetta company’s main regional gasoline pipelines went horribly wrong. An explosion and fire at the work site in Alabama shut down the line for several days, leading to a sudden and severe supply cut that left many metro Atlanta stations with dry pumps.
Motorists hunted anxiously for working pumps, and paid more when they found them. Prices jumped more than 35 cents a gallon. The episode put a spotlight on Colonial’s business and on the importance of such infrastructure to Americans’ mobility.
Colonial built a bypass around the leak site to get the flow going again, but incredibly suffered a second shutdown in November after another mishap on a related work project in Alabama. The shutdown was shorter and the effect on supply milder, however.
Colonial is no doubt hoping for a return to anonymity in 2017.
Housing rebounds, sort of
For housing, 2016 was a year of living paradoxically.
Sales and prices rose, foreclosures and delinquencies fell. It’s easy to argue that most areas are rebounding solidly from the painful housing bust of last decade.
Just look at the core counties: November is typically not the time of bustling sales, but in Cobb, there were 667 closings, in DeKalb 586, in Fulton 833 and in Gwinnett, a robust 819 — all up from 2015. Median prices rose, too: 6 percent in Cobb, 9 percent in DeKalb, 4 percent in Fulton and 9 percent in Gwinnett.
Yet one critical component refused to cooperate: inventory – the supply of homes listed for sale.
Despite hopes that higher prices and a better job market would spur sellers, inventory still lagged in 2016, especially at the lower end of the market where the first-time buyers gather. Supply was off 16 percent in Cobb, 17 percent in DeKalb, 7 percent in Fulton and 22 percent in Gwinnett.
Once again, brokers are looking hopefully toward spring. But if inventory doesn’t rebound, the market will remain unbalanced, muting the benefits of rising values.
Drama at PulteGroup
Homebuilder PulteGroup is one of metro Atlanta’s newer corporate citizens, having moved to the area in 2014 from its former home of Detroit.
Turns out it brought along a simmering pot of boardroom drama. The pot boiled over last spring when the company abruptly announced that CEO Richard Dugas would step down next year because founder and major shareholder William Pulte was unhappy with the company’s performance and direction.
That didn’t satisfy the 83-year-old Pulte. He launched a barrage of public attacks on Dugas, along with demands that a new CEO be installed sooner. Among Pulte’s gripes was the Dugas-led Atlanta move, which he said “cost the shareholders tens of millions of dollars with no apparent benefit …”
Eventually the company founder got his wish. Although PulteGroup’s board had called the founder’s criticisms “misguided,” Dugas relinquished the CEO post in September and was replaced by 15-year company veteran Ryan Marshall. Pulte’s grandson, meanwhile, joined the company board.
Airport lines gone wild
Business fliers are used to occasional airport logjams, but security checkpoint lines at Hartsfield-Jackson got out of hand last winter. Record passenger counts, along with efforts to tighten security, had lines snaking through the terminal and sometimes into baggage claim.
Then-general manager Miguel Southwell in February threatened to privatize security screening unless the federal Transportation Security Administration took action to fix things.
Faced with a barrage of media reports and political pressure, the TSA shifted workers and adjusted practices. One of the highest-profile steps was the test of so-called “smart” screening lanes at the Atlanta airport’s South security checkpoint. That checkpoint was shut down for three weeks while the new lane was built, briefly making things worse.
But by July, after the new lanes were opened and other measures were in place, wait times had shortened significantly. Fears of summer gridlock subsided.
Delta melts down
A computer outage in August cascaded into a shutdown of Delta’s entire flight operation during a critical Monday morning rush hour, with disruptions rippling across the rest of the week.
The cause was a loss of power at an Atlanta server facility, and inadequate backup power that left Delta unable to smoothly reboot its network.
The resulting meltdown was epic: more than 2,300 flight cancellations over several days, stranding travelers at the Atlanta airport and other airports around the world. Miserable encampments at Hartsfield-Jackson and other Delta hubs played out live on cable news and social media.
In September, the airline disclosed that the outage took a $150 million financial toll, including $100 million in lost revenue and $50 million in extra costs. New CEO Ed Bastian publicly apologized and Delta issued $200 vouchers to marooned customers. They’re good until Aug. 8, 2017, so the outage continues to reverberate.
Mixed job market signals
Like housing, the job market improved according to nearly all measures, but also produced dissenting data showing the healing is incomplete.
The metro Atlanta economy added about 70,000 jobs in the 12 months through October – not as strong as the two years before, but still very solid growth.
The jobless rate fell from 5.3 percent in the fall of 2015 to 4.8 percent in November. That decline came even as tens of thousands of people entered the job market – either returning after a stretch on the sidelines or taking a first stab at the job search.
So most of those people found work.
There has been a high-profile surge of corporate expansions, with a parallel hunt for techies that has boosted demand and pay for workers with the right skills.
Yet more than 140,000 people in metro Atlanta are still unemployed and roughly one-third have been looking for more than six months. And while precise data is not available, there is reason to think that many of those who have trouble finding work are older people.
New parent for Turner
Homegrown Atlanta broadcasting company Turner, owned since 1996 by New York-based Time Warner, could soon become part of a bigger media-telecom empire based in Texas.
Dallas-based AT&T wants to buy Time Warner — including its Turner brands CNN, TNT, TBS and others — in an $85 billion-plus, blockbuster deal announced in October.
It’s unclear if the deal will get done. President-elect Donald Trump slammed it on the campaign trail, saying it would concentrate too much media power. But political criticism has since softened and AT&T, which has moved aggressively into the pay-TV arena, argues it is a sensible combination that should survive regulatory review.
What does the deal portend for Turner and its several thousand Atlanta workers?
“I don’t anticipate it will have any impact on the Atlanta operations at all, ” CNN boss Jeff Zucker told The Atlanta Journal-Constitution a few days after the deal was announced.
Perhaps, but Turner’s strategic center of gravity has already shifted toward New York, raising questions about how “Atlanta-based” it really is at this point. An AT&T takeover would only fuel the drama.
Ga. Power stands by its nukes
Georgia Power defended its over-budget nuclear expansion at Plant Vogtle and disclosed it is considering building another nuclear plant near Columbus someday.
In July, Georgia Power won approval from state utility regulators to spend $99 million by-mid 2019 to study a site south of Columbus for the proposed nuclear plant, part of its long-term plan for future energy production in the state. The utility had originally asked for $175 million.
Meanwhile, back at Plant Vogtle the utility grappled with delays and contractor disputes that have pushed up costs and extended timetables. Just before year-end, the state Public Service Commission approved a settlement that would eventually pass on most of $1.7 billion in cost overruns at the Vogtle plant to customers.
Georgia Power owns about half of the project to build two new reactors at the plant. It is more than 3 years behind schedule and more than $3 billion over budget.
In exchange, Georgia Power agreed to a lower profit margin for the next four years, and tougher penalties if it doesn’t complete the plant by the end of 2020.
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