LOUISVILLE, Ky. (WDRB) – As recently as 2018, Louisville was home to three companies among the Fortune 500, the United States’ biggest publicly traded firms. Not bad for a city our size.
Now we have one: Humana.
Kindred Healthcare, one our previous Fortune 500s, was gobbled up by Humana and private equity.
And even if Louisville-based Yum! Brands hadn’t fallen out of the Fortune 500 this year (No. 505), the “Louisville based” part is arguable. The company is formally based here, but its top executives decamped years ago for Yum’s other corporate campus outside Dallas.
I don’t have to remind city officials and economic development types that Louisville came precariously close to having zero Fortune 500 companies.
But for one federal judge’s antitrust decision in 2017, Humana – by far our biggest and most valuable corporate anchor – would today be the government insurance division of rival health insurer Aetna (which has since been swallowed by CVS).
Papa John’s International isn’t even in the Fortune 1000, but the announcement Thursday that it’s establishing a new “global headquarters” in Atlanta was particularly caustic because the pizza chain grew from scratch here over nearly four decades.
“It does hurt,” said Mary Ellen Wiederwohl, who leads economic development for Louisville Mayor Greg Fischer. “It’s a local company in which we have a lot of pride.”
When these things happen, civic leaders always try to emphasize the half-full part of the glass.
When the Swedish company Electrolux proposed to buy Louisville-based GE Appliances (a deal that never happened), the bright side was that they’re really committed to the appliance business (never mind that they might consolidate all the white-collar jobs into Charlotte!).
In the case of Humana, I remember Fischer stressing that Louisville would be home to Aetna’s fastest growing division, and hey – isn’t it cool that their CEO is into “mindfulness”? Louisville has that same kind of vibe!
Here’s the half-full part in this case: Papa John’s is uprooting only some of its corporate base in Louisville. And, even as Atlanta is the new “global” headquarters where the CEO works, Louisville still gets to be called “headquarters,” too.
But I don’t think it’s lost on anyone which city is the first among equals, with Papa John’s saying that Atlanta offers the skilled people (“talent” in corporate speak) and international air access to match the company’s global ambitions.
Lest we beat ourselves up too much about Papa John’s leaving the nest, it’s worth noting that the company’s CEO, Rob Lynch, was in Atlanta before he joined the company in August 2019, and according to the Atlanta Journal Constitution, he never left.
Papa John’s told me at the time of Lynch’s hire that he planned to move to Louisville. On Friday, spokeswoman Madeline Chadwick said that was “accurate at the time,” but amid the pandemic, plans changed.
Asked what role Lynch’s personal preferences played in the decision, Chadwick stressed the business reasons for the company’s departure – Atlanta’s “diverse talent pool,” truly international airport and Papa John’s’ “deep existing ties to Atlanta” with many corporate restaurants and modern distribution center there.
To be sure, the job losses associated with this move are negligible at first: About 100 to 150, based on the squishy information provided yesterday by a source familiar with Papa John’s plans.
But the worry is about the long-term.
Louisville has seen this movie before.
As decision-making executives lose connections and allegiances to the community, jobs tend to erode.
In 1997, a Business First headline declared: “Providian sale to Aegon to have long-term impact.”
The sale of Providian Corp.’s insurance business to multinational insurer Aegon did indeed have a long-term impact on Louisville, and not for the better.
At the time of the sale, Providian employed 1,300 here. Over time, those jobs were consolidated away, and now we don’t call the office tower at 400 West Market Street the “Aegon Center” anymore, as Aegon hasn’t been there since 2012. (We still call it the Brown & Williamson Tower even though the tobacco company’s headquarters was another casualty of corporate consolidation way back in 2004).
There are many more reasons besides the jobs themselves to worry about corporate headquarters.
Corporate money has a way of rippling through the community through philanthropy, sponsorships and other businesses that people go on to start once they’re rooted in a place.
As a former high-ranking official at Louisville’s chamber of commerce once told me, corporate consolidation means fewer local executives who have the authority to write a big check without making a phone call first.
All these one-off examples beg for some data about how Louisville is doing in the corporate jobs landscape.
In the “professional and business services” sector – a very rough and imperfect proxy for corporate headquarters and the sorts of white-collar positions they create – the Louisville metro area saw 22% growth from 2010 to 2019, according to the U.S. Bureau of Labor Statistics.
That’s slower than the nation as a whole (27%). The Atlanta metro, in case you were wondering, is up 36% during that time period.
“Louisville historically has had a really hard time attracting high-end, professional jobs and corporate headquarters are the best way to get it,” said Paul Coomes, a retired University of Louisville economist who has followed the local economy for decades.
The uprooting of Papa John’s lays bare some issues that Louisville leaders have long acknowledged as weaknesses: “talent” and air service. We even have initiatives to address those.
But ad-hoc programs and flashy branding (remember when Louisville was briefly declared “the Idea Capital of the World”?) can only do so much.
There’s really one way for Louisville to insulate itself from decisions like the one Papa John’s announced Thursday: entrepreneurship.
If you were starting a multi-billion-dollar health insurance company from scratch, there are probably dozens of cities that would be a more logical home for it than Louisville. Humana is here for one reason: it was founded here.
Back in 2015, the then-CEO of Genscape told me that Houston, not Louisville, would be the ideal place for an energy information company. Genscape (now rebranding to its new corporate parent, Wood MacKenzie) remains here for the same reason: it started here. And its founders went on to help start other local businesses, including the fast-growing Edj Analytics.
“Companies tend to headquarter where they were born, and they tend to stay there as well,” Weiderwohl said.
Plant more seeds, you get more flowers. And it’s not such a big deal when, every now and then, one gets plucked.
Through his own words a couple of years ago, John Schnatter lost the ability to influence the future of the company he founded to, say, resist the allure of Atlanta.
But Schnatter got it exactly right in his statement yesterday. It’s time, he said, for “a new generation of entrepreneurs (to) create the next business success stories in the Louisville community.”