Large firms leav­ing sub­ur­bia for cities

The Denver Post - - BUSINESS - By Jonathan O’con­nell

OAK BROOK, ILL.» Vis­i­tors to the Mcdon­ald’s wooded cor­po­rate cam­pus en­ter on a drive­way named for the late chief ex­ec­u­tive Ray Kroc, then turn onto Ron­ald Lane be­fore reach­ing Ham­burger Univer­sity, where more than 80,000 peo­ple have been trained as fast-food man­agers.

Sur­rounded by quiet neigh­bor­hoods and easy high­way con­nec­tions, this 86-acre sub­ur­ban com­pound adorned with walk­ing paths and duck ponds was for four decades con­sid­ered the ideal place to at­tract top ex­ec­u­tives as the com­pany rose to global dom­i­nance.

Now its leafy en­vi­rons are con­sid­ered a li­a­bil­ity. Locked in a bat­tle with com­pa­nies of all stripes to woo top tech work­ers and young pro­fes­sion­als, Mcdon­ald’s ex­ec­u­tives an­nounced last year that they were putting the prop­erty up for sale and mov­ing to the West Loop of Chicago where L trains ar­rive ev­ery few min­utes and con­struc­tion cranes dot the sky­line.

In Chicago, Mcdon­ald’s will join a slew of other com­pa­nies — among them food gi­ant Kraft Hei-

nz, farm­ing sup­plier ADM and telecom­mu­ni­ca­tions firm Mo­torola So­lu­tions — all look­ing to ap­peal to and be near young pro­fes­sion­als versed in the world of ecom­merce, soft­ware an­a­lyt­ics, dig­i­tal engi­neer­ing, mar­ket­ing and fi­nance.

Such re­lo­ca­tions are hap­pen­ing across the coun­try as eco­nomic op­por­tu­ni­ties shift to a hand­ful of top cities and jobs be­come harder to find in some sub­urbs and smaller cities.

Aetna re­cently an­nounced that it will re­lo­cate from Hartford, Conn., to Man­hat­tan in New York City; Gen­eral Elec­tric is leav­ing Con­necti­cut to build a global head­quar­ters in Bos­ton; and Mar­riott In­ter­na­tional is mov­ing from an emp­ty­ing Mary­land of­fice park into the cen­ter of Bethesda, Md.

Chicago Mayor Rahm Emanuel said the old model where ex­ec­u­tives chose lo­ca­tions near where they wanted to live has been up­turned by the grow­ing in­flu­ence of tech­nol­ogy in nearly ev­ery in­dus­try. Years ago, IT op­er­a­tions were an af­ter­thought. Now, peo­ple with such ex­per­tise are driv­ing top-level cor­po­rate de­ci­sions, and many of them pre­fer ur­ban lo­cales.

“It used to be the IT divi­sion was in a back of­fice some­where,” Emanuel said. “The IT divi­sion and soft­ware, com­puter and data min­ing, et cetera, is now next to the CEO. Oth­er­wise, that com­pany is gone.”

The mi­gra­tion to ur­ban cen­ters threatens the pros­per­ity out­ly­ing sub­urbs have long en­joyed, bring­ing a dose of pain felt by ru­ral com­mu­ni­ties and ex­ac­er­bat­ing stark gaps in earn­ings and wealth that Don­ald Trump cap­i­tal­ized on in win­ning the pres­i­dency.

Mcdon­ald’s may not even be the most note­wor­thy cor­po­rate mover in Illi­nois. Ma­chin­ery gi­ant Cater­pil­lar said this year that it was mov­ing its head­quar­ters from Peo­ria to Deer­field, which is closer to Chicago. It said it would keep about 12,000 man­u­fac­tur­ing, engi­neer­ing and re­search jobs in its orig­i­nal home­town. But top­pay­ing of­fice jobs — the type that Cater­pil­lar’s higher-ups en­joy — are be­ing lost, and the com­pany is can­cel­ing plans for a 3,200-per­son head­quar­ters aimed at re­vi­tal­iz­ing Peo­ria’s down­town.

“It was re­ally hard. I mean, you know that $800 mil­lion head­quar­ters trans­lated into hun­dreds and hun­dreds of good con­struc­tion jobs over a num­ber of years,” Peo­ria Mayor Jim Ardis said.

Long term, the cor­po­rate moves threaten an or­bit of smaller en­ter­prises that fed on their prox­im­ity to the big com­pa­nies, from restau­rants and jan­i­to­rial op­er­a­tions to nearby sub­con­trac­tors.

“The vil­lage of Oak Brook and Mcdon­ald’s sort of grew up to­gether. So when the news came, it was a jolt from the blue — we were re­ally not ex­pect­ing it,” said Gopal Lal­malani, a car­di­ol­o­gist who serves as the vil­lage pres­i­dent.

When Mcdon­ald’s ar­rived in Oak Brook, in 1971, many Amer­i­cans were mi­grat­ing in the op­po­site di­rec­tion, away from the city.

In the years since, the tiny vil­lage’s iden­tity be­came closely linked with the fast-food chain as Mcdon­ald’s forged a brand that spread across postwar sub­ur­bia.

“It was fun to be trav­el­ing and tell some­one you’re from Oak Brook and have them say, ‘Well, I never heard of that,’ and then tell them, ‘Yes, you have. Look at the back of the ketchup pack­age from Mcdon­ald’s,’ ” said for­mer vil­lage pres­i­dent Karen Bushy. Her son held his wed­ding re­cep­tion at the ho­tel on the cam­pus, some­times called Mclodge.

The vil­lage showed its grat­i­tude — there is no prop­erty tax — and Mcdon­ald’s re­cip­ro­cated with do­na­tions such as $100,000 an­nu­ally for the Fourth of July fire­works dis­play and with an out­size sta­tus for a town of fewer than 8,000 peo­ple.

Mcdon­ald’s, though, came un­der pres­sure to up­date its of­fer­ings for the in­ter­net age, so it opened an of­fice in San Fran­cisco and a year later moved ad­di­tional dig­i­tal op­er­a­tions to down­town Chicago, strate­gi­cally near tech in­cu­ba­tors as well as dig­i­tal out­posts of com­pa­nies that in­cluded Yelp and ebay.

Chief ex­ec­u­tive Steve Easter­brook, who took over in spring 2015, sought to keep in­no­vat­ing, launch­ing mo­bile or­der­ing, em­pha­siz­ing self-serve kiosks in restau­rants and ex­pand­ing de­liv­ery through a part­ner­ship with Ubereats.

As Mcdon­ald’s em­braced tech­nol­ogy, it de­cided that it needed to be closer not just to work­ers who build e-com­merce tools but also to the cus­tomers who use them, said Robert Gibbs, the for­mer White House press sec­re­tary who is a Mcdon­ald’s ex­ec­u­tive vice pres­i­dent. That is be­cause the next gen­er­a­tion of fast-food con­sumers may be more likely to ar­rive via iphones than driv­ethroughs.

“The de­ci­sion is re­ally grounded in get­ting closer to our cus­tomers,” Gibbs said.

The site of the new head­quar­ters, be­ing built in place of the stu­dio where Oprah Win­frey’s show was filmed, is in Ful­ton Mar­ket, a bustling neigh­bor­hood filled with new apart­ments and some of the city’s most highly rated new restau­rants.

To Peo­ri­ans, Cater­pil­lar’s change of heart came sud­denly. Two years ago, the com­pany’s lead­er­ship team joined state and lo­cal of­fi­cials at a cer­e­mony to an­nounce plans for a new $800 mil­lion, 31-acre head­quar­ters aimed at re­viv­ing a down­town pock­marked by va­cant store­fronts.

“We’re here in Peo­ria to stay,” Cater­pil­lar’s then-chief ex­ec­u­tive Doug Ober­hel­man de­clared at the time. Illi­nois Gov. Bruce Rauner stood to ap­plaud.

Then, in Jan­uary of this year, Cater­pil­lar abruptly can­celed the Peo­ria head­quar­ters com­plex and said it would move about 300 top ex­ec­u­tives to the Chicago area.

The lo­cal re­ac­tion wasn’t just dis­ap­point­ment but be­wil­der­ment. Three gen­er­a­tions of the city’s res­i­dents have worked at Cater­pil­lar — de­sign­ing, as­sem­bling and paint­ing trac­tors and pipelay­ers.

Like other firms, Cater­pil­lar had a dig­i­tal hub in down­town Chicago, just over a mile from the new Mcdon­ald’s head­quar­ters. But now it is also mov­ing many of its top ex­ec­u­tives away from where col­leagues are de­sign­ing, pro­duc­ing and ship­ping the com­pany’s prod­ucts.

If more jobs go, it will di­min­ish the op­tions for highly qual­i­fied man­agers and ex­ec­u­tives who have cho­sen to make their homes in Peo­ria — a far more af­ford­able, less con­gested place than Chicago or Deer­field.

“The peo­ple who built this com­pany from 1925 on were Peo­ri­ans, they were Mid­west­ern­ers, they weren’t city peo­ple,” said Ren­nie At­ter­bury, a long­time for­mer Cater­pil­lar ex­ec­u­tive and gen­eral coun­sel.

Lee Pow­ell, The Wash­ing­ton Post

Galen Fai­d­ley of Cater­pil­lar uses a pair of glasses that give him a vir­tual-re­al­ity view in­side a bull­dozer at the com­pany’s tech­ni­cal cen­ter in Mossville, Ill.

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