Fairy tales are a drag if the prince carries off jobs

December 14, 2003|By JAY HANCOCK

MERGING two huge corporations entails many difficult tasks, not least of which is reassuring the towns you're going to hit with big job cuts that everything will be OK.

Fortunately, the folks at the St. Paul Cos. have had practice.

"We're going to have a presence that is going to be of some significance" in Baltimore, said the St. Paul CEO.

That was Douglas W. Leatherdale speaking in early 1998, when USF&G Corp. - the Baltimore operation that was bought by St. Paul - had some 2,500 workers. Leatherdale has since retired, but he passed along his script.

"I can say I'm quite sure we will have a significant presence" in Baltimore, St. Paul spokeswoman Joan Palm said last week.

Spare us, O Lord, from significant presences.

St. Paul's Baltimore work force stands at 700 and shrinking. Expect the company's recently announced marriage with Travelers Property Casualty Corp. to bring new downsizing and old bromides about Baltimore's significant role in the melded enterprise.

Spokeswoman Palm tried to discourage me from "speculating" about what will happen here after the Travelers merger. But I don't have to speculate.

First, I can listen to Jay S. Fishman, St. Paul's present boss, who said of Baltimore, "There's no question but that that's an area that is likely to be impacted" by the deal.

(Fishman was talking to The Hartford Courant, not The Sun. Cooking the layoff message according to audience is an old merger trick. While reassuring Charm City in 1998, Leatherdale told the St. Paul Pioneer Press Baltimore would be hit with heavy job cuts.)

Second, I can look up at downtown's 35-story Legg Mason building, recall when it said "USF&G" and remember what happened next.

The United States Fidelity and Guaranty Co. and affiliates were already retrenching before St. Paul bought them in 1998. First, USF&G abandoned its downtown tower and consolidated in Baltimore's Mount Washington section.

"I was sensitive to trying to be a good corporate citizen" by not ditching the city altogether, CEO Norman P. Blake Jr. said at the time. Then came the St. Paul buyout, which immediately wiped out 800 jobs. Then came more downsizing.

"I expect it will have some impact in Baltimore, but not of any great substance," a spokeswoman said at the time.

Then came the sale of St. Paul's personal insurance lines to MetLife, affecting 115 here.

"There are a lot of talented people joining us, and we are optimistic we will retain many of them," said the MetLife guy.

After that came more layoffs and then more layoffs, and this year St. Paul decided to cash in on the Mount Washington campus by selling it to Johns Hopkins and bug out to Hunt Valley with the 700 remaining workers.

St. Paul's top Baltimore executive these days is John A. MacColl, vice chairman and general counsel. The company's plan to keep MacColl in Baltimore after the Travelers merger, spokeswoman Palm said last month, "indicates our commitment to the community."

Actually, it indicates the terms of MacColl's employment contract, which is here on my desk. If St. Paul transfers MacColl more than 30 miles from Baltimore against his wishes, he could resign and collect an immediate bonus of $5 million that otherwise wouldn't be due until 2005.

MacColl, too, downplays potential new trauma from the Travelers acquisition, which is expected to cause duplications in commercial-insurance operations in Hartford and Baltimore.

"There's a little bit of redundancy and overlap, but it's not as much as you think," he said in an interview. "Baltimore is a significant branch office at this point."

Branch office sounds about right. MacColl recently stepped down as chairman of the Economic Alliance of Greater Baltimore, whose avowed purpose is "to expand economic potential" for the region.

But he's fighting a rear-guard action at his own company, which says more about the loss of corporate headquarters and the consequences of mergers than anything I've heard from a corporate spokeswoman.

Surely it must hurt to be laid off in any merger. But I can think of a worse fate: keeping your job and having to spin fairy tales about "commitment to the community."

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