THE TREND toward concentration of corporate power through acquisitions, mergers and takeovers produces losers and winners in the nation's cities. It is hard to imagine any city being a greater loser than Baltimore.
Having lived in the Baltimore area for most of my life, and having watched the dreary exeunt of corporations to other climes, I have wondered what hope there is for the economic future of the Monumental City. Strictly from memory, I compiled this list of corporations that were once locally-managed, but whose destinies are now dictated from out of town.
AAI, Amoco, A.S. Abell, Baltimore & Ohio Railroad, Baltimore Spice, Commercial Credit, Crown Cork and Seal, Curtis Bay Towing, Emerson Drug, Esskay, First National Bank, Head Sporting Goods, The Hecht Co., Jiffy Lube, The Martin Co., Maryland Casualty, Maryland Cup, Mathison Chemical, Monumental Life, National Brewing, Noxell, Read's Drug Stores, Sharpe and Dohme, Union Trust, Western Maryland Railway.
It only took me a few minutes to come up with this list. There are probably many more, and I have left out others for various reasons: Equitable Bank, for example, was absorbed, but by another Baltimore firm, MNC Financial, parent of Maryland National Bank. Others, such as Maryland Shipbuilding and Drydock were absorbed and then died. I have also omitted local department stores that followed the same pattern, and Hutzlers, which died without outside help.
Who is left? Not many heavy hitters. Black & Decker, McCormick, USF&G and MNC stand out, and they have been among the few that have been acquirers rather than the acquired. The most grievous recent loss is Noxell, one of the nation's largest cosmetic firms, with a colorful local history, that sold out to Proctor and Gamble. Executives in Cincinnati now make its decisions.
Historically, the most appalling loss was the B&O Railroad. When I was in grade school, the role of Baltimore as the cradle of American railroading was taught as an item of local pride second in importance only to the composing of the Star-Spangled Banner. CSX, which acquired and killed the B&O (along with multiple mergers), set up headquarters in Richmond. You'll find as much historical sentiment in a business corporation as kindness in the bosom of Saddam Hussein.
Does it make any difference that Baltimore is the nation's king of branch towns? After all, Martin-Marietta or CSX or Proctor & Gamble can reply that they still have huge payrolls in Baltimore -- and isn't that the important thing?
Yes, it's important, but only up to a point. Payrolls give a city is basic economic sustenance, but in the departure of top management, Baltimore has lost an army of movers and shakers. Wage earners can spend money in the area, but only management can direct its future.
The CEO wants a good road or transit system to get himself and his employees to work. He wants good services -- schools for his children, first-rate hospitals, adequate police, fire, trash collection and lively cultural and recreational institutions. Of course, so do all of us, but a local CEO or other top management person, is in a position to use muscle not available to the rest of us.
As Baltimore magazine points out in its current issue on local philanthropy, the surviving locally managed firms give generously to charitable and cultural institutions, but the numbers of Baltimore-oriented firms is dwindling. To exacerbate the situation, MNC and USF&G are both in serious financial trouble.
The most important question: Why is Baltimore the city whose assets are acquired, rather than being the acquirer? I have never heard a satisfactory answer. One former Baltimore banker told me a decade ago the problem is timid local banks that will not underwrite Baltimore enterprises. (This particular banker was hired away by a New York bank). Why have we no Coca-Cola, or 3M Corp., or Proctor & Gamble -- corporations that make immense contributions to the economic and cultural life of Atlanta, Minneapolis and Cincinnati?
I don't know the answer. I'm not sure anyone does, but that long list of departed corporations tells its own story.
Mr. Owens is a retired editorial writer for The Evening Sun.