The Company Town

Even though Boeing has moved its headquarters to Chicago, the state of Washington will always be connected with the Boeing Company. In the 1970’s that connection could have been considered unhealthy. When the SST failed, and other economic discontinuities added to company problems, Boeing laid off many of their employees. It was so bad somebody paid for a billboard that became infamous. “Will the last one to leave Seattle please turn off the lights!” Now Washington State has diversified a bit, and is not as dependent on Boeing as it once was, but we cannot deny the fact that Boeing is still important to the state economy.

King County, where Seattle is located, has just received a Federal grant for $800,000. This money will be used to train workers seeking aerospace jobs. Community and Technical Colleges will receive this windfall, and “starting this spring quarter” will train “manufacturing technicians and airframe mechanics in aerospace manufacturing skills such as assembly ad machining.” This is needed because Boeing plans to hire 3,500 to 5,000 machinists each year for the next five years.” A starting wage for a machinist is around $17, with an array of medical benefits unsurpassed. This is good for the town in which this company is operating.

A company town is in a tenuous position. If the company leaves then the town could be in trouble. Seattle learned this in the 70’s, and now Rochester, NY is learning the very same lessons. Kodak has been headquartered in Rochester since the 50’s. The population of this city grew to about 330,000 people due to the success of Kodak. However, Kodak failed to adapt its strategy to the changing digital environment resulting in stalled revenue and declining profit margins.

Although Singer and Kodak are examples of what can go horribly wrong in company towns, current Rochester population is 210,00, there are positive examples of companies that did pay attention and did change with the times thus saving the company and the town. IBM is an excellent exemplar of leadership that did make the hard decisions that minimized the negative affect of a changing environment on a suburban New York town.

“IBM also nearly died during the early 1990’s. But unlike the companies in Boston, it retooled and recovered. Why? I would argue that IBM, being a New York City company – okay, a suburban one – had a healthy disrespect for the status quo and zero tolerance for omerta.” IBM reduced its footprint and became more competitive and innovative.

The bottom-line is this, “The world might be flat. But innovation and adaptation remain local.” This is a poignant statement from at article written by Rich Karlgaard.

The corporate and civic relationship will never go away. I would argue it is even more important today due to the consumer’s ability to affect brand image within social media. The town and company need to have a positive relationship due to the fact that innovation and adaptation are human characteristics critical to continued corporate existence. Human capital, the ability to adapt and be creative, are necessary to corporate success, and subsequently to a town’s continued affluence. Company towns will never go away.

And that is my thought for the day!

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