Impact of losing Glaxo headquarters not such a blow today
November 7, 2008
Linda Loyd, Philadelphia Inquirer
So how big a blow is it to lose GlaxoSmithKline's corporate headquarters in Philadelphia?
Is it just prestige and bragging rights? Will some of the 4,500 workers here lose jobs?
The London pharmaceutical giant is consolidating what had been two U.S. headquarters - one in Philadelphia - into one at Research Triangle Park, N.C.
Will the effect be fewer high-salaried science and research jobs? Could the region lose civic leadership and charitable giving enjoyed when Glaxo had physical headquarters here?
Some say losing a corporate headquarters in today's virtual world and global economy is not as big a deal as it once was. Others suggest there is much more to having a corporate headquarters than a name on the company's letterhead.
Would Atlanta like to lose Coca-Cola Co.? What does Campbell Soup Co. mean to the city of Camden? How would Cincinnati fare without Procter & Gamble Co., Kroger Co. and Macy's Inc.?
"The heart of the issue is: What does this do to the civic fabric of the community to not have GlaxoSmithKline, even in a dual headquarters?" said Richard Fleming, Wharton graduate and president and chief executive officer of the St. Louis Regional Chamber & Growth Association.
"You lose that leadership. When you have the CEO physically located in the community, more often than not, they are more active," Fleming said. "They can make commitments, virtually on the spot."
Indeed, residents of St. Louis worried when the city's largest employer, Anheuser-Busch Cos. Inc., merged with Belgian brewing giant InBev NV/S.A. in July.
Although InBev "made it very clear" St. Louis would be the North American headquarters for a "much larger enterprise," Fleming said, the corporate headquarters will be Belgium. St. Louis will be the "global headquarters" for the Budweiser brand.
The new owner pledged to continue the civic investment and civic leadership St. Louis residents have known for more than 100 years from Anheuser-Busch. "In some cases, it ends up being OK," Fleming said. "In other cases, it represents a significant shift of emphasis."
Analyzing GlaxoSmithKline's announcement, Select Greater Philadelphia president and CEO Thomas Morr said it appeared that the region would "not be impacted very much" in job cuts. "We are retaining the workforce and the work and, therefore, the economic contribution of GlaxoSmithKline to our region."
Glaxo also promised not to cut back on support for the community and causes "they supported in the past," Morr said. "The fact they have committed to that, I consider very good news."
Morr said the effect of losing the headquarters would likely be less than it would have been 15 or 20 years ago because GlaxoSmithKline "operates virtually." Its senior executives, including retired CEO J.P. Garnier, who lived in Devon, spend most of their time on airplanes.
"This is an industry whose method of operation is changing. It's not as simple as if this were a bank or an old-line manufacturing company."
Glaxo's employees here, including researchers and scientists developing products, such as vaccines, are a crucial asset to the company's future success. "I don't think that will change," Morr said.
Glaxo did not say it was leaving Philadelphia, only that it would no longer have dual headquarters, said Steven Wray, executive director of the Economy League of Greater Philadelphia.
"The headquarters gets a lot of attention, but you want to focus on the functions and responsibilities that are likely to remain," he said.
"I think, from a psyche and image perspective, it is a blow," Wray said. "Now you don't have that HQ on some list of companies. This is a company that had three headquarters. In some ways, it was a third of a headquarters that we lost. What remains here are some solid aspects of the business that they do."
Philadelphia's loss is North Carolina's gain, and economic-development officials there are relieved not to be in Philadelphia's shoes.
"It is a big plus from the issue of bragging rights or prestige," acknowledged Harvey Schmitt, president and CEO of the Greater Raleigh (N.C.) Chamber of Commerce.
"And it's big in terms of having the corporate leadership of a substantial company in your own neighborhood. People tend to invest in and support places in which they live, because they know those places best."
In Cincinnati, home to Procter & Gamble, Macy's and Kroger, the presence of large global corporations attracts talented, diverse and well-educated workers, said Doug Moormann, vice president of economic development for the Cincinnati Regional Chamber of Commerce.
"It's executive talent, research talent, marketing talent, and that has created immense opportunities for other businesses in our community to grow," he said.
The presence of corporate headquarters also attracts ancillary businesses - suppliers that like to be close to their customers, Moormann said. "Other businesses have locations here because they want to be close to the big anchor corporate headquarters companies."
Contact staff writer Linda Loyd at 215-854-2831 or [email protected].