International -- Int'l Business: THE OLYMPICS
ATLANTA'S BIG LEAP (int'l edition)
Will the games finally give the city global stature?
The digits finally dropped to 0:00. For six years, Atlanta endured a countdown to the 1996 Summer Olympics. The clocks were everywhere--at city hall, in a sign over the expressway, at the offices of the Atlanta Committee for the Olympic Games. But the clocks did far more than count down the days to the July 19 opening ceremonies. Atlantans knew they were preparing for a global curtain call and that their success, or failure, with the games would help determine whether the ambitious capital of the New South could emerge as something much more--as a world business center of the first order.
Atlanta is not likely to dethrone New York, London, or Tokyo anytime soon, but there's no denying that the Olympics are giving a boost to the city's international standing. Atlanta's infrastructure has been burnished, and large and small local companies are using the games to cement relationships with global customers and partners, many of whom are flying in as guests. With 3.5 billion people watching the games on TV, Atlanta reckons its image will improve in ways that attract more European, Asian, and Latin American companies to locate operations here. Atlanta and its suburbs already host 1,200 non-U.S. companies, employing more than 80,000 workers, many foreign-born.
NEW LABOR MAGNET. The three-year boom sparked by the games has caused tens of thousands of Americans to relocate from the North and Midwest, taking advantage of Atlanta's modest costs. A throng of Pakistani taxi drivers, Filipino and Thai restaurant workers, Korean apparel merchants, and Mexican trademen likewise has taken up residence. The result is an injection of cosmopolitanism into a city long dogged by its reputation for provincialism and black-white polarization.
Moreover, Atlanta's mastery of technologies covering everything from traffic flow to audio and video links via a high-speed fiber optic network are helping establish the city's technical know-how. "If Atlanta's not already an international business center, it will be," says George B. Autry, president of MDC Inc., a North Carolina-based think tank that recently published a study on the South's economy. "The Olympics will seal their fate."
One reason Atlanta can hope for tangible returns is that the games cost taxpayers virtually nothing. There will be little financial hangover--even though Atlanta nets a new $122 million downtown stadium, new roads, and a state-of-the-art traffic plan. The city has a shot at reinvigorating its central business district and inaugurating a revival of downtown residential construction. Add it up, and state officials expect the Olympics to have a $5.1 billion long-term economic impact in Georgia, most of it in Atlanta. That includes $2 billion in spending on communications, $1.4 billion on lodging and entertainment, and $950 million on business and health services. Having blown past longtime Southern rivals such as Birmingham, Ala., or Charlotte, N. C., Atlanta's burghers now believe that the Olympic edge will help put them on par with Chicago and Los Angeles in many key respects.
Hosting the games doesn't guarantee a sparkling future, as past hosts have learned (table, page 37). Seoul and Barcelona were catapulted forward, thanks largely to government largesse that funded vast construction. They used the games to transform their cities with new infrastructure and demonstrate their economic ambitions. Seoul's 1988 games were particularly beneficial because they conferred recognition on South Korea as a technology powerhouse.
But Los Angeles emerged from the 1984 games practically unchanged. And Montreal, after the 1976 Olympics, faced a $1 billion tax bill. To this day, some Montrealers believe the games short-circuited a booming transcendence as one of North America's most vibrant cities. Cash-strapped Montreal had to raise taxes and cut infrastructure improvements. "The Olympics do not necessarily give you an ongoing annuity of jobs and prosperity," says Ihor Kots, managing director of the Montreal-based Canadian Bond Rating Service.
Atlanta expects results as good as, if not better than, Seoul and Barcelona got. First, its games are overwhelmingly a private-sector endeavor. Olympics chief Billy Payne funded his $1.7 billion games with a record $540 million in sponsorships, $422 million in tickets, $560 million from broadcast rights, and $182 million from merchandising and other sources. Indeed, rather than getting a hand from city hall, the Atlanta Committee for the Olympic Games got a bill: $9.5 million to cover the cost of police, sanitation, and other services.
Even so, the transformation of Atlanta's face is dramatic. Aside from the new stadium, the $500 million in construction includes six other permanent sports facilities and dormitories for 10,000 students at Georgia Institute of Technology and Georgia State University. An airport bond helped fund a $500 million face-lift for Hartsfield International, and a city bond issue paid for $142 million in bridge and road repairs.
More difficult to quantify is the impact the games will have on business' perception of Atlanta. The anecdotal evidence is positive. Consider Randstad Corp. The Dutch temporary-labor provider would not have located its U.S. headquarters in Atlanta were it not for the Olympics. Its initial short list included New York, Chicago, Los Angeles, San Francisco, and Houston. But then a Georgia development recruiter visited Erik Vonk, a Randstad executive, and sold him on Atlanta, which offered the strong economy of the American South, the world's second-busiest airport, and just enough of an international flavor to make Randstad's employees feel comfortable.
By becoming an Olympic sponsor, Randstad was able to make a dramatic debut in the U.S. with the company's largest-ever assignment: interviewing more than 50,000 people to fill 20,000 positions ranging from bus driver to interpreter. After the Olympics, Randstad will have a presence in industries such as transportation and hospitality that have frequent need for temporary workers. "For us, there was only one choice, and it was Atlanta," says Vonk, who has bought an elegant antebellum-style mansion in Atlanta's northwest suburbs.
Randstad is not alone. Coca-Cola, BellSouth, United Parcel Service, Scientific-Atlanta, and Home Depot also chipped in up to $40 million each to sponsor the Olympics, with an eye toward turning the games into a long-term opportunity. Coke built a global marketing program around the games, investing an estimated $250 million in everything from the nationwide torch run to a temporary downtown entertainment park. BellSouth showcased its flexible and powerful cellular capabilities by teaming up with Scientific-Atlanta Inc. and Panasonic to build the high-speed system to transmit televised images of Olympic events.
COURTLY HOSTS. A key to wringing the maximum long-term benefit from the games is a program called Operation Legacy, led by Georgia Power Co., the electric utility for Atlanta Inc. This program recruited more than a dozen of Atlanta's business elite to play host during the games to executives from around the world with relocation or expansion projects in mind. The chieftains are using the same kind of Southern courtship talents that helped Payne and former Mayor Andrew Young, who now heads the Atlanta Chamber of Commerce, persuade International Olympic Committee officials to hold the games in the hot, landlocked, and rather obscure city.
Operation Legacy focuses in part on Atlanta's strengths in the communications, health-care, and transaction-processing fields. It helps to have a brand name such as CNN to sell the world on Atlanta's communications strengths. But just as vital are the 30-plus large fiber trunk lines that snake around the city---the largest concentration in the U.S.
Completely independent of the Olympics, the city's educational and research centers also are spawning creative talent, and that is equally essential to Atlanta's ambitions. Georgia Tech is noted for its electronics engineers and Emory University for its health-research capabilities. These universities have grown more active in "spinning off" companies. For example, Scientific-Atlanta, best known as the maker of TV box decoders, was founded in the 1970s by a pair of Georgia Tech graduates and in turn has spawned more than a dozen startups from within its ranks.
This combination of inexpensive technical talent with a first-rate infrastructure helps fuel Atlanta's international aspirations. A company such as BellSouth Corp. is able to use the city as a platform for competing in 17 countries. Focusing on cellular operations in Europe and South America, BellSouth's non-U.S. revenues have grown from zero in 1988 to $1 billion in 1995, or 5% of total revenues. "In many ways, Atlanta's growth as an international city tracks the growth of the telecommunications business overseas," says BellSouth CEO John L. Clendenin.
With major companies paving the way, smaller companies are pushing overseas, too. Building on Atlanta's role as a regional distribution center, many of them specialize in distributing complex information and technology worldwide. Tiny Erdas Inc. chose Atlanta mostly because Lawrie Jordan founded the company in a Georgia Tech corporate incubator. His small, privately held company sells software that creates three-dimensional maps of everything from ethnic boundaries in Bosnia to malaria epidemics in Africa. Customers include governments and other organizations working on projects ranging from peace talks to city planning. "We're working in 100 countries around the world," says Jordan, who has racked up more than 3 million travel miles on Delta Air Lines.
The possibility of using Atlanta as an international base helped attract Kent "Oz" Nelson, chairman of United Parcel Service Inc. The man who moved the package-delivery company from Greenwich, Conn., to Atlanta says the city has boosted his company's global expansion in vital ways both concrete and abstract. The move slashed housing costs by half, helping in the recruitment of top management, and UPS's bean counters figure that strong international connections at Hartsfield save the company more than two person-years in travel time.
LOCAL WISDOM. Atlanta's business network is also an asset. When UPS was perplexed about how to handle its currency risk, Coke's chief financial officer offered key advice. When it needed a take on the Bulgarian market, it commissioned a market profile by the Southern Center for International Studies in Atlanta. "If you're playing in the world, you don't do it alone here," says Nelson.
Overseas companies that have located in Atlanta play a particularly important role in pulling the city into the global economy. Siemens Energy & Automation Inc., the U.S. unit of the German electronics giant, exports to Latin America and Southeast Asia. It recently put employees on a plane from Atlanta to clinch a $20 million contract in Taiwan, for example. "Many people view the Southeast as a place to compete globally, and Atlanta is the epicenter of that," says Chief Executive Thomas J. Malott, who finds Atlanta convenient because he is able to take direct flights back to his unit's German headquarters.
The 230 German companies in Georgia, most of them in the Atlanta area, far outnumber the 150 Japanese companies. But both Germans and Japanese say Atlanta is improving as an operating base. Norio "Nick" Tsubokawa, president of YKK's Corp.'s zipper-making operation, is pleased with the growth of Atlanta's Japanese-language school. Besides, he notes, the city boasts more than 40 sushi bars. It had one when he arrived in the mid-1970s. He, too, makes frequent use of Hartsfield to commute back home.
If Malott and Tsubokawa once felt isolated living as foreigners in Atlanta, there's no excuse for feeling that way today. As the city attracts more foreign companies, individual neighborhoods attract the Dutch, the Japanese, the Koreans, and the Germans. There is a sizable Hispanic population, and there are a fair number of Canadians. Coca-Cola Chairman Roberto C. Goizueta recalls that he was the only foreign executive at Coke's headquarters when he moved to the U.S. in the early 1960s. Today, nearly half the company's top officers were born outside of the U.S.
The question now is whether the city can use the Olympics to consolidate the gains it has made and carry itself to the next level of performance as a world business center. Skeptics argue that civic leaders and the Chamber of Commerce won't sustain their drive after the games end. "They've made noises and waved their hands at doing something, but there's no real concerted effort," gripes Georgia State University economist Donald Rataczak.
There are others who see Atlanta's lust for international status as misguided. "After the Olympics die down, it will go back to being the capital of the American South, nothing more," says James A. Schriner, a partner with corporate-relocation firm PHH Fantus Corp., which moved UPS and several other companies to Atlanta.
But the fact that the games are on has stilled most critics, at least for now. Although there is some fear the growth bubble may burst after the games leave town, most economists believe that the underlying economic momentum should minimize any post-games hangover to a one-year absorption of Olympic-related workers and a dip in housing starts.
To outsiders, hearing Atlanta's corporate elite talk about the city's prospects as a global business center may suggest they've stayed eut too long in the heat. But to people who have seen the city transform itself to host the Olympics, the upbeat accent seems justifiable. "Never sell Atlanta short," says Coke's Goizueta. "This is a city that's very good at living up to its hyperbole." If Atlanta comes within a 10K run of the vision that its corporate leaders so fervently espouse, it will be doing quite well indeed.By David Greising in AtlantaReturn to top