U.S. Regions
Atlanta: A Center of Excellence
This metro area is one of the fastest-growing business hot spots in the nation. Its lure: an educated and diverse workforce, a strong economy, and posh lifestyle amenities.
It could be the can-do attitude of the region, its educated workforce, the temperate climate, or all three, but one thing is for sure: Atlanta has become one of the most attractive places in the nation for companies—big and small—to do business. Just consider this: During each of the past ten years, according to the Metro Atlanta Chamber of Commerce, an average of 180 companies have expanded or relocated operations in Atlanta. Some of the FORTUNE 500 who call Atlanta home are Coca-Cola, Delta Air Lines, Southern Company, and the Home Depot. The most recent arrival is Newell Rubbermaid, a $7 billion kitchen and home products company that is establishing a new corporate headquarters and training center set to open in March. Says Allen Franklin, CEO of Southern Company, an $11 billion energy company that has been in the area for decades: "Atlanta is an easy sell. It's a vibrant yet comfortable place to live, and people's eyes light up when you talk about moving here."
Atlanta's demographics make a strong case for why business leaders find the "big peach" so irresistible. Since 1990, the population in metro Atlanta—28 counties in all—has increased 53%, to 4.7 million people. And economists say the growth should continue. The area's population is expected to grow by 170,000 in each of the next five years. Sure, there have been charges that such growth has put a strain on Atlanta's infrastructure. Traffic congestion around the city is certainly a common complaint, and a costly sewer-system overhaul following years of neglect is currently underway. Yet none of that has kept Atlanta and its surrounding suburbs from becoming, as one business executive puts it, the "jewel of the Southeast."
The people and businesses making their way into Atlanta are lured in large part by a fast-growing economy, a robust job market, reasonable housing costs, an enviable quality of life, and a world-class airport. Hartsfield-Jackson handles nearly 80 million passengers every year—earning it the distinction of being the world's busiest airport—and offers more than 500 nonstop flights to 44 international cities every week. Indeed, with its sleek, clean terminals, hundreds of food and retail shops, and spacious atrium, the airport has become a model for others around the country.
A $5.4 billion expansion project is currently underway that will add a new runway, terminal, and air traffic control tower. A concentration of top-notch colleges and universities, including Morehouse and Spelman colleges, Georgia State University, Georgia Institute of Technology, and Emory University, are a rich source of technologically savvy talent for local companies and those considering a move into Atlanta. In fact, job growth in the region is projected to hum along at 3% annually through 2008, nearly three times the national rate. "Atlanta is an economic pacesetter not only in the South but for the entire country," says Bob Nardelli, chairman, president and CEO of the Home Depot, the country's leading home improvement retailer, which is also headquartered in Atlanta. "None of our spectacular success would have been possible without the enthusiastic support from this community, which helped give us our start 25 years ago."
Like the rest of the country, Atlanta was hit hard by the recent recession. Transportation, information technology, and telecommunications companies, as well as tourism, were affected the most, but according to Sam Williams, president of the Metro Atlanta Chamber of Commerce, all are on the upswing. "We felt the effects of the recession earlier than other parts of the country, and we are leading the way out," he says, pointing to a Labor Department report in which Atlanta led the nation in job growth in 2003. Indeed, Mark Vitner, a senior economist with Wachovia Bank, wrote in a recent economic update on Atlanta, "Strong population growth, an unrivaled transportation network, growing international recognition, and a young, rapidly growing, entrepreneurial workforce all make Atlanta one of the nation's best places to do business."
The industries best poised to take Atlanta into another decade of strong growth center around what Williams calls "industries of the mind." Bioscience, logistics, software, and telecommunications companies take advantage of all that Atlanta and its surrounding suburbs have to offer. For instance, the area has grown into a leading global logistics hub, since the companies headquartered here demand easy access along the Eastern Seaboard and frequent direct flights to points in the U.S. and beyond.
UPS, the world's largest package-delivery company and a global leader in supply chain services, moved its headquarters to Atlanta in 1991 after a national search. It now has more than 10,000 employees in the metro area delivering over 13 million packages a day to more than 200 countries around the world.
Like other logistic companies, UPS chose Atlanta for its strategic location on the East Coast and its world-class airport. In addition to UPS, more than 2,000 companies, employing more than 84,000 workers, are in the logistics industry. It's no surprise that most of the CEOs we spoke with mentioned Hartsfield-Jackson Airport as one of the biggest benefits to locating a business in Atlanta. More than 80% of the U.S. population is within a two-hour flight of the city.
The Centers for Disease Control & Prevention is the cornerstone of Atlanta's stake in the field of bioscience. More than 10,000 jobs have been created locally around the development of vaccines, cancer research, and the making of medical devices, according to a 2003 industry report by Ernst & Young. In the software arena, local B2B companies such as Manhattan Associates and Radiant Systems continue to create new jobs, and of course the area leads the way in telecommunications. Not only is Atlanta the home of Turner Broadcasting System Inc., but investments by BellSouth, one of the city's biggest employers, enable nearly 95% of the company's customers in the region to be within 12,000 feet of a fiber connection. More than 100 Internet service providers, including EarthLink, offer service in the metro region.
Business Friendly
It's not just a plentiful and talented workforce that makes Atlanta and its surrounding suburbs so attractive to business. The cost of operating here is alluring as well. For instance, Georgia has the lowest unemployment-insurance costs in the U.S., and Atlanta boasts low office-lease rates ($23.43 per square foot, vs. $44 in Boston and $55 in New York City) and below-average operating costs compared with many other major cities. The relatively low 6% corporate income tax in Georgia has not changed since 1969. In addition, the city and state offer an array of business incentives, including tax credits for job creation, child care, investment, and retraining programs.
 Convergent Media Systems, a company that provides video-based communications networks and services for FORTUNE 100 companies, has certainly been a beneficiary of Atlanta's rising star. The company was started in the city in 1980 with three people and today employs 300, with headquarters in the northeast suburb of Alpharetta. Bryan Allen, the company's president and chief operating officer, says for firms in need of top-notch IT talent, Atlanta can't be beat. "We always have a need for technologically savvy workers, and schools here such as Georgia Tech create a huge pool," he says. "We don't have trouble finding people."
Harry Volande, executive vice president and chief financial officer of Siemens Energy & Automation, a division of giant German conglomerate Siemens AG that employs 3,800 workers in Georgia, most of them in Atlanta, says he doesn't have trouble recruiting people into the area either. "It's easy to get people to come to Atlanta," he explains. "The short winter, the beautiful spring and summer, and the mild fall are terrific." Though luring folks from sunny Los Angeles or idyllic San Francisco is a bit more challenging, Volande knows he can seal the deal when he starts talking about housing costs. "As soon as I tell them how much more house they can get for far less money, that usually changes their minds," he says, laughing. For example, a four-bedroom, 2.5-bath house will average around $270,000 in metro Atlanta, compared with $891,000 in San Francisco and $508,000 in the New York City area.
It's not just big business that benefits from Atlanta's largesse. Small firms can tap into Small Business
Administration loans, and Atlanta's Economic Development Administration provides long-term loans for companies expanding or establishing businesses in areas under redevelopment. Among manufacturing companies in the region, union membership is an anemic 7% of the workforce. In fact, only 82 of the state's 159 counties have any unions at all.
Beyond the corporate incentives, however, lies perhaps one of the most powerful recruiting weapons in Atlanta's arsenal: the collective brainpower of its civic and business leaders. Mayor Shirley Franklin, the city's first woman mayor and the first African-American woman to serve as mayor of a major Southeastern city, is a feisty, no-nonsense leader who took office in January 2002. She says corporate managers not only are welcome to play a role in the short- and long-term health of the city and its suburbs, they are expected to do so. "For the most part, the CEOs want to stay involved," she explains from the sitting area outside her office at City Hall. "It's a way for them to network but also to feel that they are a part of what happens here." In fact, during a critical point in the negotiations with Newell Rubbermaid over its move to Atlanta, Home Depot founders Bernard Marcus and Arthur Blank—long-time Atlantans—called Rubbermaid CEO Joseph Galli to sing the city's praises and convince the chief that Atlanta was the right move. They succeeded.
Input from community business leaders benefits both the businesses and Atlanta. Allen of Convergent says he welcomes the chance to speak with the mayor and sit on the boards of city organizations. "It helps me to know what's going on, and that's good for business," he says. But Allen believes Atlanta has a lot to gain as well. "The senior managers of the companies down here have skills we use every day, such as negotiating contracts or simply managing to make a profit, that can help the city," he says. "There's a lot of horsepower."
Southern Company CEO Allen Franklin, who's been in Atlanta for nearly ten years, says it "won't be more than a day or two" before a new CEO gets a call from the mayor or other business leaders asking which committees or organizations he or she is going to join. "When I was part of the Metro chamber," recalls CEO Franklin, "it wasn't just to have lunch once a month. We got involved in tough decisions and issues that affected Atlanta."
Perhaps no issue illustrates this kind of partnership between business and community better than the city's recent $3.2 billion sewer-repair project. Not long after Mayor Franklin took office, she tackled the thorny and expensive issue of repairing the city's deteriorating 100-year-old sewer system. Because prior administrations had not sufficiently kept up with the maintenance of the system, the pipes were rotting beneath the ground. The situation reached its nadir in 1998, when the Environmental Protection Agency issued a consent decree essentially ordering Atlanta to fix the problem or face a moratorium on any further development in the city.
Franklin quickly rallied business leaders around the importance of repairing the system—in spite of the cost—and looked for ideas on how to pay for it. She sought the technical guidance of Dr. Wayne Clough, president of Georgia Tech, with the actual repair plans, and spoke with the CEOs of GE Power Systems and Georgia Power Co., among others, about the best ways to lobby for state and federal aid. Says CFO Volande of Siemens: "Shirley wasn't afraid to tackle a tough issue, and she did it head on." In December the state finally agreed to loan the city $500 million over ten years and extended the repayment plan from 20 years to 30 years. Says Southern CEO Franklin: "Atlanta is the economic engine of the state, and I believe it helped to hear from business leaders how critical it was for the state to step in and give the city a hand in dealing with this issue."
Connecting to the World
When is an airport not just an airport? When it's as big a draw to new business as Hartsfield-Jackson International. Located ten miles from downtown Atlanta, Hartsfield-Jackson Atlanta International Airport is the world's busiest airport, handling ten million more passengers every year than Chicago's O'Hare, the second-busiest. If you have to fly anywhere in the Southeast, count on passing through Hartsfield-Jackson. It has 153 domestic and 28 international gates, so business travelers can easily fly directly to different cities in the U.S. and abroad without the need for connecting flights. "The ability to get in and out of the city quickly and efficiently is so important for the businesses already here and for the ones looking to come here," says Southern CEO Franklin. "It's one less obstacle."
One company benefiting from—and adding to—Atlanta's growth is AirTran Airways, a low-fare carrier that was started in the city ten years ago. Today AirTran employs 3,500 workers in Atlanta, and by May it will add another 420 positions. The airline is building a two-bay hangar at Hartsfield-Jackson that will employ 220 people, and it will open its second 200-person reservation call center in Atlanta in March.
In addition to helping attract new business into the area, Hartsfield-Jackson is also a major economic power in the region. It has 55,000 employees right at the airport and another 18,000 personnel who work off-site. The revenue it generates for Atlanta: more than $18 billion per year.
Since it is the busiest airport in the world, it should come as no surprise that Hartsfield-Jackson also experiences its share of delays. To accomodate future growth and tackle this issue, airport administrators and the city began back in 1999 to plan for the airport's expansion, including the construction of a new 9,000-foot runway that should be complete by early 2006. Dwight Pullen, runway director, says designing the new airstrip has required an unprecedented degree of cooperation between city, county, state, and federal government because of its scope. "Part of the new runway will be built over ten lanes on Interstate 285, a kind of engineering feat that has never been done anywhere in the U.S. before," he says.
Tooling in a white SUV around the site that will become the new runway, Pullen envisions planes readying for takeoff, while the rest of us simply see cranes and mounds of dirt. "The dirt embankment alone for this project costs $360 million," he says. Construction of the embankment for the runway will require 21 million cubic yards of dirt, enough to fill the Georgia Dome six times, Pullen says. Overseeing this project means becoming a bit of an expert on soil composition and density, he says, since any paving for the runway cannot be started until it is determined how the soil settles and how solid a base it will be. In addition to the runway, Pullen is also responsible for overseeing the construction of a new, taller air traffic control tower. FAA regulations require that air traffic controllers have a clear line-of-sight to all areas of the runways. The location of the new runway will make that impossible from the old tower. A new 394-foot tower—the highest in North America—will be built in its place.
The airport expansion, which includes a new passenger terminal and a consolidated rental car facility, as well as upgrades to existing facilities, will add a total of 41 new gates and is projected to cut delays by 50%, Pullen says. During the construction phase, which will last until 2010, it will create another 24,000 jobs in the region.
Intelligent Growth
One unintended consequence of the kind of expansion Atlanta has seen over the past decade is a strain on its infrastructure. In addition to the sewer problems, more congested roadways, downtown traffic, and smog are just some of the problems that affect the lives of residents. Mayor Franklin, the Metro Chamber of Commerce, and business leaders say that while they welcome the influx of new businesses and projects to Atlanta and its suburbs, they want that growth to be intelligent. "As government, we have to see the big picture," says Mayor Franklin. "There has to be a balance between development that's good for the local economy and development that preserves green space and the character of the region."
 Indeed, whether in midtown or downtown Atlanta or the outlying suburbs, growth is everywhere. Says Allen of Convergent, only half-joking: "The state bird is the construction crane." One way the region's leaders say they can achieve the kind of intelligent growth Mayor Franklin desires is through the use of what they call mixed-use developments. These fabricated neighborhoods combine office space, retail shops, and residential units, all in one place. The hope is that people will live where they shop and work, and therefore cut down on the need to use their cars so frequently—or at all.
Case in point: Atlantic Station, a new residential, business, and commercial community being built on the site of the former Atlantic Steel Mill. The 138-acre parcel, which runs parallel to I-75/85 in midtown Atlanta, had been an eyesore for decades. Now, in a joint venture with real estate company Jacoby Development and AIG Global Real Estate Investment Corp., the region hopes Atlantic Station will become the national model for urban renewal.
Standing at the giant window of his 17th-floor office on West Peachtree, directly across the street from the site, Brian Leary, Atlantic Station's vice president of design and development, can barely contain his enthusiasm. He bounces from the window to a huge conference table covered with a miniature model of the completed Atlantic Station. "Everything about this is new and smart, and environmentally friendly," he says.
Through the fog on this rainy day stands the first completed office building at Atlantic Station, a 500,000-square-foot tower that will eventually house the Atlanta corporate offices of SouthTrust Bank, one of the earliest and biggest employers in Atlanta. It's not the building's size, however, that has Leary excited. "This is the first Ôgreen' office tower in the Southeast," he says. For instance, the roofing on the building will be made from a reflective material so that the tower doesn't absorb an excess amount of heat in the summer months, he explains. In addition, a system of chilled water will run through the building to cool it, and high-performance glass will keep the temperature in window offices consistent throughout the day.
Leary says the real pull of Atlantic Station—and the aspect that gets to the heart of the mayor's intelligent-growth initiative—is the sense that people can finally live, work, and play in the same place, just like, well, a neighborhood. The center or downtown area of Atlantic Station, called "the District," will be a collection of small and large retailers, all within walking distance of one another. Bath & Body Works, Express for Men, and Victoria's Secret are some of the retailers that have already leased space, says Leary. Above them, two-story residential lofts will be built, just one aspect of the housing at Atlantic Station. With the addition of single-family homes, condos, and townhouses, there will be enough housing for up to 10,000 people. Ringing these smaller stores will be a 30,000-square-foot Publix Supermarket, the first IKEA in the Southeast, an old-fashioned but technology-laden movie theater with 16 screens, a health and fitness club, a Dillard's department store, and a score of restaurants offering diverse cuisine. Built beneath the District will be parking for 7,300 cars. Although street parking will be available, Leary says he hopes the design of the District will encourage people to walk rather than drive.
To help further foster the sense of neighborhood, special attention is being paid to the community's green space. "We envision people going into one of the restaurants in the spring and summer with a picnic basket and taking out lunch or dinner to eat in one of the parks or on the greens," says Leary. The first phase of Atlantic Station should be completed by next year, he says. For the city, Atlantic Station will be an economic win as well as a design win. Leary estimates that the property tax bill will bring $30 million a year to Atlanta and that retail sales alone will approach $500 million a annually.
Intellectual Capital
A region that attracts the best and brightest technology companies naturally needs to attract the best and brightest students. Atlanta consistently ranks among the top ten U.S. metro areas in ratings of higher education. The region has more than 40 universities and colleges, and when technical colleges are factored in, total enrollment is more than 200,000 students.
The graduate business schools, especially the J. Mack Robinson College of Business at Georgia State University and the Goizueta Business School at Emory University, are rich sources of talent across a wide range of specialties. Diane Fennig, director of graduate student and alumni services at Robinson, says students are encouraged to get several years of work experience before enrolling at the college. "The area businesses that recruit here want to know that these students have been out in the world and have a sense of how business operates," she says. With 2,500 students, Robinson is Atlanta's largest B-school.
The Goizueta Business School—named after legendary Coca-Cola CEO Roberto Goizueta—is consistently the highest-ranked business school in Georgia. The school custom designs executive-education programs for major global corporations such as the Home Depot, Coca-Cola, and UPS. Its five MBA programs attract students from more than 45 countries, and about 30% of the students in the traditional daytime programs come from outside the U.S. Volande of Siemens, whose CEO sits on the advisory board of Georgia Tech, says he appreciates the highly diverse faculty and student body at many of the colleges. "As a global company we like the fact that we have an ethnically diverse group of students to choose from."
Of course, at the end of the workday—and especially the workweek—it doesn't hurt that Atlanta has dozens of sporting and cultural offerings. The city boasts professional teams in football (Falcons), baseball (Braves), hockey (Thrashers), and basketball (Hawks), as well as top collegiate teams. Those less interested in professional sports can enjoy hiking, world-class golf courses, tennis, museums, opera, dance, and theater. Atlanta's business and civic leaders appreciate the rich quality of life the city and its suburbs have to offer, and consider them major selling points when trying to attract new business. The city that works hard knows how to play hard too.
—Susan Caminiti
Industry Trailblazer
Turner Broadcasting System Inc. is a major producer of news and entertainment product around the world and a leading provider of television programming. The Atlanta-based company's portfolio of international networks and brands includes the original 24-hour news network, CNN/U.S., as well as CNN Headline News, CNN International, CNNfn, CNN.com, and numerous other CNN-branded news and information services that together aggregate some 1.7 billion audience impressions each day. Turner's entertainment networks, which include TBS Superstation, TNT, Cartoon Network, Turner Classic Movies, Turner South, and Boomerang, are leaders in audience delivery, ratings, and industry honors. Turner Broadcasting also owns the Atlanta Braves, Major League Baseball's winningest franchise since 1991, whose home games are played at Atlanta's Turner Field. Turner Broadcasting is a Time Warner company.
Web Directory
City of Atlanta: www.atlantaga.gov
Metro Atlanta Chamber of Commerce www.metroatlantachamber.com
AirTran Airways: www.airtran.com
Convergent Media Systems: www.convergent.com
Goizueta Business School: www.goizueta.emory.edu
The Home Depot: www.homedepot.com
J. Mack Robinson College of Business: www.robinson.gsu.edu
Siemens Energy & Automation: www.sea.siemens.com
Southern Company: www.southerncompany.com
Turner Broadcasting System Inc.: www.turner.com
UPS: www.ups.com
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