Heading for the Home Office

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When small towns land big firms, the ripple effect of economic benefits can spread throughout the local business community and last for many years.

By Patrice D. Bucciarelli

IN 1990 a corporate dream team gathered around a conference table in Arkansas to create a blueprint for the future of its community. Sam Walton, Don Tyson, and J.B. Hunt envisioned Northwest Arkansas bustling with diverse industries, brimming with amenities, and able to reach an entire continent via a diverse transportation infrastructure. Since then the region has experienced a 60 percent increase in jobs over the past eight years, seen a 47 percent increase in population, and attracted corporate relocations including the marketing, logistics, and research and development departments for major players like Proctor & Gamble, as well as Midwest regional offices for big names such as Johnson & Johnson.

According to Uvalde Lindsey, the Northwest Arkansas Council's staff director, such success is due at least in part to the fact that Northwest Arkansas is home to the headquarters of three major U.S. corporations - Wal-Mart in Bentonville, Tyson Foods in Springdale, and JB Hunt Transport in Lowell - and their corporate captains, as well.

"Communities rise and fall according to the quality of their leadership," Lindsey points out. "Anywhere corporate headquarters are located, you find that kind of leadership."

In fact, Walton, Tyson, and Hunt didn't invent the notion of making community centerpieces of their corporate headquarters. In 1915, a group of businessmen in Dodgeville, Wis., published a "Pocket Directory of Business" to promote their little town as "the most progressive town for business in Wisconsin." Eventually, Dodgeville would become globally known as the home of catalog retailer Land's End.

A similar effort in the 1930s involved civic and business leaders in Pella, Iowa, who paid the founders of the Pella Window Company the then outlandish sum of $1,000 to persuade them to transplant their factory from "urbane" Des Moines to their rural Iowa town.

Whether they are homegrown or transplanted, major corporations are inexorably entwined with the towns in which they reside. And inevitably the presence of major players puts those small-town locales not only on the map, but also on the radar screens of smaller players eager to reap the benefits of locating near the big boys.

Landing in the Right Spot

Entrepreneur Bill Schwyhart arrived in Northwest Arkansas from California 23 years ago with a car full of belongings and a head full of ambition. Over the years he engaged in a number of commercial pursuits, from car dealerships to real estate ventures. Today he is a partner in the development of a 400-acre office and retail complex designed to serve companies who supply the region's biggest industries and also grow fledgling firms along the way.

"There is an entrepreneurial spirit here," says Schwyhart, who also is a member of the Northwest Arkansas Council, "that was begun by the Waltons and the Tysons and the Hunts. But even though the story of the region is no longer just the Wal-Mart, Tyson, Hunt story, their presence remains significant."

That's because the three heaviest hitters contribute more than inspiration to the region. Along with their phenomenal business success came the political clout to persuade federal aviation transportation authorities to locate a regional airport there, and to convince state lawmakers to change the way corporate location incentives are created and distributed in order to attract high-tech industries.

In small towns across the United States, big-league corporate players flex their formidable muscles to get things done. The results benefit the corporations, certainly, but others win, too - not only do headquarters operations purchase supplies and support services from local vendors, they also have the means - and the high profile - to persuade others in the community to follow suit.

Freeport, Maine, has long been home to outdoor outfitters L.L. Bean. And Maine's nostalgic and rugged outdoor image has become synonymous worldwide with the company's line of clothing for sportsmen - and those who want to dress like them. Companies rooted in Freeport's business community have the opportunity to trade on Bean's carefully cultivated connection with Maine's bucolic lifestyle. At the same time, L.L. Bean uses its considerable clout to promote the use of Maine-made products - from the high tech to the traditional - in its own facilities and elsewhere.

"All of Freeport grew up around L.L. Bean being here," says Jim Nimon, director of the Freeport Office of Business Development. "And while they have taken great care to cultivate their nostalgic public image, they are very interested in being progressive within their own organization. In doing that, Bean is very conscious of using Maine suppliers, in its headquarters and in its retail stores. It even encourages displaying the work of Maine artisans in retail outlets it does not own. And," he continues, "I don't think there's a way to overstate the benefits of that."

Promoting the success of local upstart industries not only makes major players good neighbors, it makes good corporate sense, as well. Just as firms must compete nationally - even internationally - for executive talent, their communities must offer the services and quality-of-life amenities to which transferring executives and their families are accustomed. That means small towns must offer educational systems, housing stock, and recreational and cultural opportunities to rival those in New York, Dallas, Atlanta, and elsewhere. Hometown corporations make significant investments to get those things and then loan high-profile executives to help maintain them. Along the way, they build very specific reputations for their communities and turn their towns into household names.

Not Just Overalls

Oshkosh, Wis., is home to three major corporate players in three very different industries. The Oshkosh Truck Co., manufacturers of specialty vehicles for fire departments and the U.S. military, and Bemis Corp., makers of packing tape and plastic film, both maintain headquarters there. But it was OshKosh B'Gosh, makers of family-focused apparel - including the company's signature overalls favored by railroad engineers and parents of active kids - that first put the town on the international map.

"People always ask me if there really is an Oshkosh, Wis.," says Oshkosh Chamber of Commerce President and CEO John Casper. "It's not like Brigadoon; there really is a town here that is alive and well in part because of the name recognition."

In fact, the town's mystique played a role in bringing the Experimental Aircraft Association to the town in the 1970s. Initially the site for an annual convention, the EAA now maintains its own organizational headquarters in Oshkosh, where it serves as a clearinghouse for information on the latest experimental aircraft technology and coordinates specialty aviation events worldwide.

According to EAA spokesperson Dick Knapinski, the annual EAA fly-in featuring cutting-edge aviation technology brings 750,000 aircraft enthusiasts from 50 states and 70 nations and 10,000 aircraft - and, according to figures compiled by the University of Wisconsin, visitors spend some $80 million during their one-week stay there.

"When we built our headquarters here in the 1980s, our location was really at the edge of town," Knapinski recalls. "Now, there's a company that makes aircraft kits that came here because we were here and an outlet mall that told us its location was based on the numbers of people we bring in every year for the fly-in."

Basler Turbo Conversions, Inc. services the thousands of aircraft taking part in the EAA fly-in when it is not engaged in its primary business of remanufacturing aircraft for the governments of Thailand, Colombia, El Salvador, and others. According to Basler president Tom Weigt, the presence of the EAA headquarters is a valuable asset to both facets of his business.

When it comes to providing fixed-base operations, he says, the EAA is critical. "In addition to that, it helps us in that we can bring our international clients to the EAA headquarters and the aircraft museum to show them a history of aviation and a different side of the industry they might not otherwise know about. In the aircraft industry, Oshkosh is known worldwide."

Ripple Effects

Similarly, Kohler, Wisconsin's economic engine was initially primed by the Kohler Company - and the maker of plumbing fixtures and cutting-edge bathroom design continues to figure significantly in the town's well-being by generating jobs, maintaining economic stability, and developing cultural amenities. But Kohler the town has been able to capitalize on the presence of Kohler the company to grow an industry far removed from the fabrication of faucets.

The American Club was constructed by the Kohler Company generations ago as a single building to house the immigrants it recruited to work in its expanding plumbing fixture factory. Today, the American Club Resort has a five-star rating and sits beside two world-class golf resorts. One of them, Whistling Straits, will host stars of the PGA tour in 2004. As a result, Kohler now ranks among Wisconsin's top tourist destinations, alongside Wisconsin Dells, Madison, and Milwaukee.

"People come from literally all over the world to stay at the American Club," says Dee Olsen, executive vice president of the Sheboygan (Wisconsin) County Chamber of Commerce. "But the Kohler headquarters and its showrooms are tourist destinations, too. And the development of the tourism venues has created not only service-sector jobs, but helped establish smaller companies that produce the things the resorts need to accommodate their guests."

If the presence of corporate headquarters can spawn diverse industries in home-office towns, out-of-town expansions can generate jobs and dollars at home, as well. As corporations expand, corporate-level job opportunities increase. So does the need for auxiliary services in the real estate, retail, and service sectors.

The Pella Window Company, for instance, maintains facilities far from its Pella, Iowa, headquarters, including manufacturing plants in Illinois, Pennsylvania, Minnesota, Oregon, Ohio, and Kentucky. According to economic development officers in Pella, expansions are as welcome at out-of-town locations as they are at home.

"Every expansion means more jobs for the headquarters towns because they need more people at the headquarters level to keep track of what's happening at the other facilities," says David Vollmar of the Pella Iowa Chamber of Commerce. "In fact, Pella has added 75,000 square feet to its headquarters to accommodate its expansions."

"At the same time, the more a major company expands, the more people it brings to its headquarters for meetings and other activities," he adds. "That trickles down to jobs in the service and retail sectors."

To be sure, large corporate headquarters are, for the small towns in which they reside, tangible assets and valuable credibility builders; useful tools for wooing and winning other location-hunting companies. However, economic developers in towns where influential major players reside admit that serving the needs of the corporate leader while looking out for the community at large can take place on a very slippery slope.

"Community leaders don't want people to think they are being controlled by a single company," says Jim Nimon. "So the relationship between the corporation and the community is constantly monitored by both sides. Certainly they want to work together. But there has to be a balance between serving the community's needs and the corporation's needs."

Achieving that balance is critical in small headquarters towns where even a minor financial twitch at the home-office level can have a profound impact on the economic health of the entire community. A major event such as the 2002 bankruptcy of cable communications giant Adelphia Communications - which employed 1,500 of Coudersport, Pennsylvania's 2,650 people - can be devastating. With that in mind, small towns increasingly use the presence of high-profile corporate headquarters as "anchors" for attracting new industry and investment - rather than risk labeling themselves "one-company towns."

Spreading Success

When jam, jelly, and topping giant J.M. Smuckers diversified its product line to include the Jif peanut butter brand and Crisco oils, folks in tiny Orrville, Ohio, took notice - especially since Smuckers employs 660 of Orrville's 8,500 residents. But according to Jennifer Reusser, president of the Orrville Area Chamber of Commerce, while the addition of products will add jobs at the headquarters and manufacturing levels, Orrville has been careful to become as diversified as its best-known corporate resident.

"Sure, when Smuckers announced its acquisition of Jif and Crisco, people held onto their seats," Reusser says. "Even though Smuckers is a well-grounded company here, anything can happen. But small as Orrville is, it is also home to 25 manufacturing firms that make everything from pipe organs to leather goods to wire and dairy products, and that takes the edge off."

"But I think our biggest benefit is that Smuckers provides leadership by setting the bar high for the way we do business," she continues, "and I don't think you get that everywhere - certainly not somewhere the relationship between the community and the corporate headquarters does not exist."