NOT a good thing

The Delta/Northwest merger has been announced.

We’ll see what happens, and the extent to which Minnesota may need to seek penalties against the new organization.  As Governor Tim Pawlenty said:

In 2007, we negotiated agreements with Northwest to keep hub operations and a headquarters presence in Minnesota. We will examine how the merged entity will fulfill those commitments

Damn straight.  Losing a fortune 500 company headquarters matters.  State of the Brand speaks of marketing and benefits, tangible and intangible, for having major corporate presence and especially corporate headquarters in a city.  Sure, they speak of retaining the hub, but that’s not good enough.

From a tangible perspective, large corporate headquarters provide a number of benefits: Executive level employment, corporate philanthropy, cultural enrichment funding, and innovation / entrepreneurship hubs (as smaller firms spring up to grab business from these uber-entities).

All these concrete reasons provide a powerful incentive to keep a corporate headquarters in your state.

But the departure of a corporate headquarters has an intangible affect as well – a brand impact.

When a state works to create an image for itself (or in the case of branding, a state has its image created for it at the same time), it leverages these household names to “anchor” its position.

We see that dynamic at work in Minnesota.

Minnesota is a “biotech leader” because of Medtronic and Mayo Clinic. Minnesota is a “manufacturing/innovation” leader because of 3M. Minnesota is a “retail powerhouse” because of Target. The state is an agricultural/food innovator because of Cargill and SuperValu.

Until now, Minnesota was an “aviation center” because of Northwest Airlines.

As Minnesota tries to present itself on the national stage as a good place to live, a good place to work, and a good place to seize opportunity, it relies on these brands to help make its case.

Exactly.  Minnesota is due hundreds of millions if the new company walks out on its committments.  And it should collect – it is small compensation for lost opportunity and broken promises.

The real solution here is to maintain two headquarters cities – it’s not at all uncommon, respectful of both Atlanta and the Twin Cities, and reasonable given the lack of overlap in the separate entities’ operations.

Will clearer heads prevail?  Unclear but unlikely.  We can only hope Oberstar manages to gum up the works if they aren’t cooperative.