In the waning days of the Great Recession, Atlanta celebrated news that sparked hope for better times. Not one, but two Fortune 500 companies announced they would move their headquarters to the metro area, bringing a jolt of good-paying jobs and confirmation of Georgia’s economic promise.
Ten years later, 2019 has opened with a brutal reversal: Metro Atlanta is losing not one, but two Fortune 500 headquarters.
Atlanta’s SunTrust Banks will merge with Winston-Salem’s BB&T to create the nation’s sixth-largest bank, based in Charlotte. Just three weeks earlier, First Data, a Sandy Springs-based payments processing behemoth, said it would be acquired by Wisconsin-based Fiserv, with the surviving company based near Milwaukee.
What might be missed in the latest angst: The sky isn’t falling. Atlanta’s economy appears strong, as does its hold on a large pool of Fortune 500 headquarters, which has remained remarkably stable over the last 20 years.
Last year only New York and Houston were home to more of the nation’s 500 largest companies by revenue. Had Atlanta been without SunTrust and First Data, it still would have been in third place.
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Hosting a corporate headquarters confers more than status and bragging rights. It often means lots of jobs, many of them very well paid, and big new construction. Do you like local theater or want more support for a charity? Companies often give extra to those in closest proximity to their leadership. Corporate heavyweights including Coca-Cola, UPS, Home Depot and Delta Air Lines — just some of the 13 Fortune 500 companies that call Atlanta home — have a long history of that.
So when a big company moves away, it’s usually a big deal.
“There is also the old saw about that when the corporate headquarters leaves, the heart leaves, too,” consumer advocate Clark Howard said.
The departures of SunTrust and First Data strike at both the heart of a crucial sector that city boosters had pegged for big job growth — financial tech — and erases Atlanta’s last big local bank. The mergers also highlight how quickly corporate identity and peoples’ career paths can be overturned by everything from rising shareholder expectations to shifts in technology and consumer patterns.
In both instances, the companies say the mergers are about getting bigger in the face of disruption in their industries.
Atlanta’s economy has been robust lately. It felt the worst effects of the Great Recession a little later than much of the country, then took longer to pull out of the economic tailspin than many of its peer cities. After trailing the nation for years, Georgia’s jobless rate is now better than the national average.
Over the last decade, average weekly wages here have risen 24 percent, faster growth than in Charlotte, the proposed new home for a SunTrust/BB&T combination.
Big headquarters are image builders for communities.
Consider the pitch R.K. Sehgal used to give international officials when he was overseas recruiting businesses for Georgia as the head of the state’s economic development operations.
“We have more Fortune 500 companies here than the city of Los Angeles,” he’d tell them. Or San Francisco. Or Dallas. He would keep listing cities.
“It used to shock them,” Sehgal said. “This statement got their attention.”
The planned departures of local headquarters for SunTrust and First Data are concerning, said Sehgal, who sits on an international advisory board for First Data.
It will lead to questions from other corporate relocation prospects, who are sure to ask why some big companies are leaving, he said.
But Atlanta can also point to recent wins.
In December, railroad giant Norfolk Southern officially announced plans to relocate to Atlanta from Virginia. It’s expected to take a spot in a future Midtown tower. Financial technology company NCR and homebuilder PulteGroup also have moved their headquarters here in recent years.
This past week, officials with the Georgia Chamber of Commerce and the state Department of Economic Development welcomed corporate prospects to the state’s 31st annual quail hunt. The SunTrust merger was announced Thursday morning and it was the buzz of the event but state leaders focused on the matter at hand — convincing dignitaries that Georgia was the best place for their businesses.
Site Selection Magazine picked Georgia as the top state to do business for several years in a row under Gov. Nathan Deal, and new Gov. Brian Kemp has vowed to maintain the state’s ranking among the corporate location expert class.
Georgia has had other high-profile victories, and a surge of tech jobs moving to Midtown to be near Georgia Tech. BlackRock, an elite global financial services firm, announced a new technology innovation center last year.
Farther out, Mercedes-Benz opened a new North American headquarters campus in Sandy Springs in March. It also picked the region for a new innovation lab. And Porsche put its North American hub and a test track near the airport.
Such arrivals have helped offset big departures.
Consumer products conglomerate Newell Brands left for New Jersey. And bottler Coca-Cola Enterprises became an entirely different company after the mothership Coca-Cola globally restructured the way it packages and ships drinks.
Other Fortune 500 companies looked at Atlanta for a headquarters but didn’t bite. That included Archer Daniels Midland, General Electric, and most recently, Honeywell, which announced in November it was moving from New Jersey to Charlotte.
The biggest miss was the sweepstakes for Amazon’s HQ2. Atlanta and Georgia boosters pursued it aggressively. The tech giant announced in November it would split its 50,000-job second headquarters between New York and Northern Virginia. Nashville, another perennial Southern rival, won a surprise 5,000-job Amazon tech facility in a stinging blow to Georgia’s pride.
On Friday, the Washington Post reported Amazon was reconsidering the 25,000-job New York piece of its decision after running into a buzz saw of opposition from community groups and some local lawmakers.
It’s unclear if that is simply a matter of posturing by the e-commerce giant or a genuine opening for other finalists — including Atlanta — in Amazon’s HQ2 search.
During Georgia’s earlier quest for Amazon, The Atlanta Journal-Constitution did an analysis of about two dozen factors, including air connectivity, workforce quality, diversity and business climate. Atlanta ranked near the top in each compared to the other cities in Amazon’s shortlist of finalists.
Atlanta’s traffic and limited transit system were shortcomings. Recent debates at the Gold Dome over so-called “religious liberty” legislation, that critics say could be used to discriminate against the LGBT community, also likely hindered Georgia in the Amazon search. It also could complicate other corporate recruitments if the issue arises again.
Living without SunTrust
It’s one thing to lose a prospect like Amazon. It’s another to lose the headquarters for a company like SunTrust that has long been entrenched in Atlanta.
One of its predecessor institutions, Trust Company, was an underwriter for Coke, the world’s largest beverage company, and one of the earliest holders of Coke stock.
The mood among several Atlanta business gurus was one of resignation. Beyond a potential economic hit, it was a wound to civic pride.
“This is not about us not loving Atlanta,” Kelly King, BB&T’s chairman and CEO, told the AJC. “It is about us wanting our company to be able to survive and thrive and we believe it will be good for Atlanta, it will be good for [Winston-Salem] and Charlotte and all our other constituents.”
Chris Marinac, a bank analyst with FIG Partners in Atlanta, said Charlotte is a financial services hub and it’s where the banking talent is. Bank of America is based there, and Wells Fargo chose it for its Eastern U.S. hub.
“I think there’s going to be a war on talent (in Charlotte), but the talent exists,” Marinac said. “The reality is it’s a better talent pool than either Winston-Salem or Atlanta.”
Both SunTrust and First Data are expected to keep a sizable number of jobs in metro Atlanta. Local business leaders point to the new bank’s decision to plant its corporate and investment banking flag in Atlanta, and commitments to expand some operations here.
Hala Moddelmog, CEO of the Metro Atlanta Chamber, suggests Atlanta’s stature is undiminished on numerous fronts. For instance, it’s still the leader in electronic payment processing.
“We are still the fintech capital of the country and we don’t plan on stepping back on that at all,” she said.
— Staff writer Michael E. Kanell contributed to this article.