Here We Go Again

It looks like my local and state governments are gearing up to take money from my business and give it to US Airways.  Because, you see, politicians don't have problems in elections if they lose a few anonymous small businesses, but they do feel vulnerable if their city loses a major corporate headquarters:

Metropolitan Phoenix has not faced losing such a significant hometown
company since America West Airlines went bankrupt in 1991.

"The decision will be driven by what's in the best interest of
the stakeholders, which includes the creditors, the shareholders and
our employees," said C.A. Howlett, US Airways' senior vice president of
public affairs.

Tempe may have the hometown advantage, but Atlanta will no doubt vigorously and publicly fight to capture the headquarters....

Valley lawmakers, business leaders and economic development officials,
who have been largely silent in public, are having informal, quiet
discussions with the airline. They say they want to keep the
headquarters local but disagree about how to accomplish that goal and
when to move forward with a plan.

"I don't think we're at a phase where we should be panicking," said
Darcy Renfro, Gov. Janet Napolitano's policy adviser on higher
education and economic development. "The governor is very engaged.
We've jumped on this as soon as we could to make sure that we are
ready."

Even as Napolitano and Phoenix Mayor Phil Gordon plan to meet with US
Airways CEO Doug Parker, possibly this week, some maintain it is too
early to devise a strategy.

Just great.  If they don't want to stay, let them go.  They can have Atlanta.  I have lived both places and wouldn't move from Arizona to Atlanta for any reason.  By the way, the Arizona politicians are downright subdued in their response vs. this craziness from Atlanta:

Atlanta Mayor Shirley Franklin opposes the merger and recently blasted US Airways' customer service in a column in the Atlanta Journal-Constitution.

What theory of government could possibly make it Ms. Franklin's job to opine about the relative merits of various private company's products in her official capacity as mayor?  Why does the Atlanta city government need to have an official position on a merger of two private companies?  The last time I remember public authorities vociferously opposing a merger, it was the Pennsylvania government trying to stop (successfully, in the end) the buyout of local company Amp by AlliedSignal.  And what did this achieve?  It allowed Amp to be bought by Tyco, which has been rocked by scandal.  Pennsylvania stockholders who ended up with Tyco rather than AlliedSignal (now Honeywell) stock were much worse off several years later, as were Amp employees who traded AlliedSignal for Tyco as their boss.

One of the reasons I like Arizona is that we actually have a pretty strong libertarian streak here, going back to Barry Goldwater and extending today with Congressman Jeff Flake.  So I must admit that this made me feel better, and is something you would hear from a politician in very few states:

"We would like to have that company here, but it will not make or break
Arizona. We have companies that are moving all the time," said Barrett
Marson, director of communications for the Arizona House of
Representatives. "We're growing by leaps and bounds. Arizona does not
have many headquarters, but it does just fine, thank you very much."

I have written about government subsidies of corporate relocations here and here, among many other places.

  • I wonder where Napolitano's real concerns are; no free-market advocate, she's probably just as concerned if not more so, that "losing" a corporate hq could be used against her sometime in the future.

  • beowulf

    Sorry for the late hit, sort of stumbled onto your blog, lot of good stuff here.

    As for Atlanta's mayor butting her nose in-- The city owns and run the local airport (either the busiest or 2nd busiest in the country, depending on your metric). Delta is by far the airport's largest tenant, I believe they own an absolute majority of the gates.

    So beyond civic pride, Atlanta has a financial interest in Delta's corporate affairs, and both the city and state will work to torpedo the merger if the headquarters leaves Atlanta.