Private Companies and Eye on the Pie and Economic Development Incentives and Headquarters Relocations and Tax Credits and Opinion and Economic Development

EYE ON THE PIE: Watch your pocket; someone may pick it

June 22, 2009

This is a cautionary tale. Beware of your best commercial friends, your most trusted business allies, your most generous corporate supporters. They may abandon you when you need them most.

Let's fill in the details. NCR Corp. (formerly National Cash Register) was founded in Dayton, Ohio, in 1884. It became one of the great innovative companies in American business history. Now NCR is moving from Dayton to Duluth, Ga., an Atlanta suburb.

The company has been part of your life since your birth. Your commercial activities have been rung up on its cash registers or point-of-sale terminals. In the past week alone, you probably used one of its ATMs at your bank. Your utility payments may have cleared through its check-processing systems. NCR bar-code scanners have followed your packages across the nation.

NCR was a respected member of the Dayton community. It was to that western Ohio city what Cummins Engine is to Columbus, Ind.—home-grown, internationally prominent and locally responsible.

Now, NCR is moving its corporate headquarters and more than 1,000 jobs from the Buckeye to the Peach state. The leaders of Dayton and Ohio are outraged. They claim they had no warning of this impending move.

If those political and business leaders had looked, the signs were there.

In 1991, NCR was bought by AT&T, a conglomerate engaged in agonized restructuring and unable to define itself in a new environment. Within five years, NCR's worldwide work force shrank from 53,800 to 41,100. By 1996, AT&T was ready to spin off NCR. The damage, however, was done. NCR had spent half a decade as a foster child in a dysfunctional family. From that time forward, NCR has been a different company, buying and selling companies rather than innovating, and its worldwide work force has declined to 22,000.

After AT&T, NCR shipped its voluminous corporate records to the Montgomery County Historical Society. A nice civic gesture or a weighty goodbye?

NCR was a company with a history of promoting from within and whose executives held office for decades. Yet in 2005, the top executive position at NCR was given to Bill Nuti, a 41-year-old with no ties to NCR or Dayton. Soon, many NCR executives were working and living in New York City. The company said its world headquarters were in Dayton, but decisions flowed from NYC.

Among those decisions were new customer service and manufacturing facilities in Georgia. The corporate headquarters move, announced June 2, should not have been a surprise if anyone wanted to pay attention.

NCR denies that the $60 million in tax breaks from Georgia has any bearing on its move. Ohio was ready to offer only half that amount. But NCR and Georgia agree there is a highly skilled work force available in the home of the Braves. The education institutions of the state are becoming among the best in the nation. The Atlanta airport offers direct flights to everywhere. The art museum, the symphony, the sports teams ... .

Now that Atlanta has lured NCR, what about Dayton? The answer depends on what Dayton did in the past 10 years to provide for the future. No doubt there will be a sudden interest in economic development, many committees, task forces, and fingers pointed, all of little consequence.

The best economic development work keeps an eye on the present and builds for the future. It cannot undo the neglect of the past.•:

Marcus taught economics for more than 30 years at Indiana University and is the former director of IU's Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.

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