From BP to TRW, Cleveland has lost many iconic employers. But new companies have arrived and others have re-invested. Headquarters employment has never been so high.
The former BP Tower was the North American headquarters of British Petroleum before BP abruptly pulled out of Cleveland in 1998. Now it's the 200 Public Square Building and the regional headquarters of Huntington Bank. It's been 15 years since British Petroleum pulled its North American headquarters from Cleveland, sending shudders through Northeast Ohio, yet many Clevelanders still talk about BP's exit like it was yesterday.
The lingering bitterness is understandable. With little warning, unseen London executives killed more than a thousand local jobs, vacated the BP Tower and severed a Cleveland legacy dating to John D. Rockefeller and his Standard Oil Co.
But maybe, some say, the city took that loss and others like it too hard. Cleveland, once known as a headquarters city, has quietly become one again.
In recent years, the number of people working for a company headquartered in and around Cleveland has mushroomed to an historic high. Far from being a headquarters has-
been, the Cleveland-Akron region is home to the fourth largest share of headquarters employment in America, according to a study being released today by the business attraction agency Team NEO.
The loss of Sohio still stings, as does the disappearance of major employers like TRW, Office Max, Rubbermaid and LTV Steel. But as iconic companies crashed or slunk away, the study shows, others have decided that Greater Cleveland is a great place from which to run an enterprise.
Thomas Waltermire, the chief executive of Team NEO, thinks the city needs to stop dwelling on its losses -- which were usually outside of its control -- and consider its wins.
That may take some effort, as the victories evoke far less drama.
"Psychologically, losing one of these companies is more damaging" than gaining one, said Waltermire, the former chief executive of PolyOne, a $3 billion company headquartered here. "I mean, how many people are running around cheering that Eaton bought Cooper Industries? But that's big. Our headquarters employment continues to be amazingly strong."
Since 1990, the study found, the number of people working for a company headquartered in Greater Cleveland has grown by 160 percent, to nearly 49,000 people, likely the most in the region's history.
Unfortunately, headquarters employment is tied to larger job trends that are not always so bright. Many of the companies headquartered in Northeast Ohio once built their products here, too.
Often, the corporate presence grew as manufacturing shrank through outsourcing. Today, many longstanding employers, like Goodyear, have a larger global presence but fewer local workers.
Still, headquarters jobs have an outsized impact that ripples beyond charitable contributions and civic prestige. According to the U.S. Census Bureau, people working at the HQ earn an average salary of $89,000, well above the median income in Northeast Ohio.
High-paid CEOs skew that average, but plenty of people hold good-paying jobs as accountants, marketers, human resource experts and other crew needed to sail the flagship.
In fact, it's the wide selection of professional services in Northeast Ohio that convinces so many companies to establish themselves here, observers say. For that, credit the factories and foundries that once filled the Flats.
Cleveland is flush with accounting firms, law firms and banks here because of the steel mills, rubber factories and parts-makers they once served, said Edward "Ned" Hill, a professor of economic development at Cleveland State University.
"It's the history of big-company management that we have," Hill said.
A company that needs proximity to financial centers may be better off establishing its headquarters near New York City, he said. But if it's looking for professional managers, reasonably priced, "That's our sweet spot," Hill said.
Amanda Butler, director of investor relations at Lincoln Electric, said it helps that the region offers a transportation network that includes a port and an airport with a hub.
After recent acquisitions, Lincoln Electric employs 10,000 people worldwide and enjoys annual sales of $2.9 billion. But much of its research and development and even its manufacturing is centered in Euclid and Mentor.
"We're able to use Greater Cleveland as a major hub and export worldwide," Butler said. "It's a great talent pool. There's strong universities. We think we really benefit from being here."
Chris Connor, the chairman and CEO of Sherwin Williams, adds a dynamic work force and world-class research and development going on in health care and manufacturing as major enticements.
"Cleveland is and has been a terrific location for corporate headquarters," he said in an email.
The census bureau defines a headquarters as a place where the workforce is engaged in running a company or an enterprise and where management decisions are made. Team NEO includes in that definition major employers like Eaton, which for tax purposes calls its headquarters Ireland but which just opened a new corporate campus in Beachwood.
In all, Team NEO counted a little more than 500 headquarters companies in its 18-county study region, from modest family businesses to nine Fortune 500 companies, including Progressive Insurance, Parker Hannifin, J.M. Smucker and Sherwin-Williams.
One of the main forces behind growth in headquarters jobs, says Waltermire, is the same business strategy that often steals those jobs away: acquisitions.
Cleveland lost BP America in 1998 when its corporate parent, British Petroleum, bought a bigger American oil company, Amoco, and consolidated North American operations at Amoco headquarters in Chicago.
Similarly, the region lost TRW and its 100-year legacy when the company was bought and absorbed by another defense contractor, Northrop Grumman, in 2002.
Lately, the often-brutal tides of capitalism seem to have shifted Cleveland's way. Last November, Eaton deepened its market share when it bought out competitor Cooper Industries. The maker of Smucker's jams and jellies has been growing aggressively through acquisitions, and Sherwin-Williams is trying to buy a major paint-maker in Mexico and expand global operations orchestrated from Cleveland.
The commitment to expand from Northeast Ohio reflects well on the region, Waltermire said. Chief executives answer to customers, investors and board members. Headquarters decisions are not based on hometown favoritism.
"If this was not a place where that company can really succeed," Waltermire said, "they would not be here."