Chapter One: Cleveland’s Business Triumphs

“The Best Location in the Nation,” a well-known advertising ploy first developed by the Cleveland Illuminating Company (CEI) following the Second World War remained a successful standard bearer for Cleveland’s growing business community well into the 1960s. However, that popular slogan symbolized much more than just a catchy phrase designed to promote that city’s great business potential to new investors. It represented one facet of a more extensive business campaign orchestrated by Cleveland’s top brass in the immediate post-war era. Their collective intuition along with everyday common sense enabled the city’s many diverse corporations to not only meet economic and financial goals on an annual basis; but at times, even exceed the accepted norms of the day. That kind of proactive business thinking continues untarnished into the 2020s.

The large number of Cleveland firms recorded annually on the Fortune 500 listings, starting in the mid-1950s, was a testimony to the innumerable top quality products and impeccable services originating from the many successful companies located there. From a purely historic perspective, Cleveland was anything but “a mistake on the lake” for its many satisfied investors. This writing will review the local business decision-making processes as seen through some of Cleveland’s most highly respected Fortune 500s over the past six decades. This writing is not intended to be an exhaustive work that focuses on the inner-workings of corporate America over those crucial years. It also does not concentrate on the significant role played by the latest economic and financial principles in attempting to resolve the innumerable complex problems encountered by many large corporations in today’s highly complex business world. That kind of detailed inquiry is best left to nationally recognized analysts and technical experts who are well-versed on such matters.

In this instance, primary emphasizes will be placed on the most likely economic and financial circumstances responsible for determining whether a local enterprise stayed in Cleveland or not. Reexamining those prime managerial practices and business procedures from an historic light is well worth both the time and effort if for no other reason than the fact that many of these once cherished economic and financial axioms are still applicable in today’s market setting. However, before analyzing some of the critical policies and marketing strategies utilized by key leaders within the Cleveland’s business community over the past 60 plus years it is important to briefly review some of the economic and financial benchmarks that helped to set the standard for their many well-crafted goals and objectives. Locational choices continue to play an essential part in the enduring success of nearly every business regardless of its economic prowess, function or size. In the case of the majority of Fortune 500s, it often took months, if not years, before agreeing on the final site for their new headquarters. A number of germane economic and financial issues frequently affected the choice.

Once a new headquarters site had been selected, it typically took an earthshaking economic development or a crucial event before that same company would relocate somewhere else. When corporate executives finally believed that the time was right for just such a move then there was very little any shareholders could do to prevent it. During the 11th hour, community spokespersons might have tried a last ditched effort to keep that company in their city or town by offering various tax abatements or other equally attractive economic and/or financial options. Rarely did those special incentives reverse the decision. Since the mid-1950s, Cleveland, OH, typifies a major Fortune 500 city that has dealt successfully with innumerable economic and financial changes that have changed the destiny of so many of its largest corporations. Located halfway between New York City and Chicago, that much admired business capitol has always lent its support to the many aims and objectives expounded by its top business leadership. Nationally recognized for its efficient highway network, ample railway systems, accessible airports, hardworking labor force, affordable real estate market and reasonable tax rates, this major center still appeals to many Fortune 500 firms even if the number recorded on the annual list is subject to change.

In fact, time honored businesses in Cleveland take enormous pride in the fact that they have evolved successfully from small, local enterprises into large, international conglomerates. Although the economic and financial criteria governing their daily practices and routines may have changed significantly over those pivotal years, the multitude of economic and financial benefits derived from being situated in “the best location in the nation” have not wavered. In appraising Cleveland’s Fortune 500 ventures many of its harshest critics have contended that the disinclination of many late 20th century Cleveland business leaders to divert their attention away from the older iron and steel industrial base towards newer endeavors had convinced some savvy Fortune 500 firms to leave the confines of Cleveland for the more welcoming environment awaiting them in the South and West.

Unfortunately, that conclusion, in itself, may not hold up under closer investigation. In point of fact, the vast majority of corporations rarely acted in a haphazard manner and specially when it comes to selecting a new site for their national headquarters. Furthermore, most corporate strategists that were responsible for handling a wide range of highly delicate matters, including any relocation efforts that might have been occurring within the foreseeable future, also orchestrated the multitude of quintessential acquisitions and mergers that unfolded during those six decades. Some outspoken economists in modern times have contended that the vast majority of acquisitions and mergers conducted during those strategically important years symbolized little more than a series of independently launched power plays instigated by ruthless business firms against one or more of their closest rivals.

Although that did occur on numerous occasions, it was anything but a universally-recognized truth. Those same critics further argue that many of those acquisitions and mergers did indeed signal a time of due diligence, a period in which all involved in those activities had the unique opportunity of reviewing both their recent economic and financial successes and failures as they prepared for the inevitable business changes waiting them around the corner. That might have happened in some cases but again not a worldwide phenomenon. What those same analysts tend to overlooked is that some poorly managed local firms actually want to be taken over by another enterprise as way of avoiding economic or financial calcification. This proved outstandingly important in a business world where economic and financial endurance was measured primarily by aggressive profit seeking motives that were stimulated by frequent and rapid internal business changes. Taking that idea of fast motion a step further, it was those very tightly held economic and financial considerations occurring on the brink of previously unimagined, full-blown internal managerial squabbles that often resulted in a lead-in company following through without any qualms the kind of ruthless attacks against one or more of its chief competitors they so vividly describe.

In some rare cases, previously unforeseen economic and/or financial contradictions might have led to a reversal in business fortunes or roles whereby the buyer suddenly becomes the seller and vice versa. The irony in all of that was not lost to even the most casual observer in that the majority of acquisitions and mergers transpiring within the Cleveland business community, from the mid-1950s onward, did virtually nothing to quiet mounting economic and financial tensions that were playing out on a regular basis among remaining belligerent competitors. In fact, such activities, often clocked in the greatest of secrecy, tended to magnify not decrease, the competitiveness among rivaling aspects. In the long-run, that growing animosity and anxiety prevented many otherwise reasonable corporations from engaging in what should have been very sobering negotiating talks. Those discussions if done in the proper spirit would have produced workable agreements beneficial for all parties involved.

Of course, timing was everything during any negotiation processes with certain 20th century decades experiencing a higher percentage of profitable acquisitions and mergers than others. As one might expect, the business strategies used by explicit corporations to either acquire or merge with others varied greatly depending on current market conditions or specific company needs. Those tightly held universal economic and financial values were often the same as their long-term business aspirations and corporate traditions. The unsettling nature of the domestic economy, anywhere from the mid-1970s to the early 1990s, led to an alarming number of high profile acquisitions and mergers among all kinds of businesses. Many of acquisitions and mergers were instigated by very adroit corporate raiders from easily identifiable entities. The subterfuge most of them used to attain their specific business goals was both clever and simple. Relentless in their quest to accumulate an enormous stake in a company they considered grossly undervalued led those raiders to hurriedly procure large blocks of stock in that very firm. Once ensconced into that enterprise’s particular corporate culture, they then began to exercise their-own, very well-defined economic and financial prerogatives. Their new entitlements, prompted by their rapid accumulated of stock holdings, frequently forced the firm, in question, to follow questionable business practices often for unspecified periods of time.

Those highly aggressive new-to-the-scene stakeholders, more often than not, defended their cavalier business approaches by claiming that their actions would not only positively shakeup the company’s status quo; but also, rapidly increase the value of that firm’s stock in the market. Of course, that rarely happened. In many instances, their actions resulted in hostile takeovers usually ignited by those same disgruntle investors. Throughout the 1970s and 1980s, the national media and the buying public remained fixated on the numerous acquisitions and mergers that resulted in the creation of new, international conglomerates. Although the media most often focused on the more exciting business aspects related to those important takeovers, their financial outcomes were rarely in doubt.

The decades of the 1960s and 1970s saw conglomerate mergers gain an even greater following mainly among sharp minded U.S. businesses that wanted to not only diversify their current operations; but also, increase the quality and quantity of their products and services. Generally initiated by tightly held self-interests, those very concentrated actions further encouraged lead-in companies to cross-sell their products and services. Many large corporations with excessive capital to draw upon increasingly entertained the idea of instigating conglomerate-type mergers at the expense of other, smaller companies with less available resources. Those participating in such efforts had convinced themselves, beyond any doubt, that conglomeration mergers symbolized a very reasonable investment option with only minimum financial risk for their stockholders. They minimized their liability by insisting that their many eager investors assume the bulk of any financial risk at the outset.

Most buyers and sellers involved in such acquisitions and mergers wanted to achieve a reasonable solution to their present business dilemma as quick as possible. That proved true in numerous instances even if the business methods and strategies they employed at certain stages of the negotiation process might have seemed unconventional. In spite of it all, corporate negotiators rarely lost sight of their intended goals or objectives. Everyone knew full-well what was at stake here. Recent unfavorable business developments in the form of dwindling capital reserves; slumping sales and poor returns on investment dollars frequently led many corporations to seek out possible buyers very rapidly.

The driving force behind such unprecedented actions symbolized much more than just finding an acceptable buyer quickly. Well thought out business objectives governed their every move. In the case of the purchaser, it wanted to utilize all the remaining assets from the corporation it was about to buy while the seller hoped to not only cut current losses; but also, guarantee that its principal investors receive fair compensation for the large amount of stock they were about to surrender to the new ownership. Once a merger had been finalized then the new owners had every legal right to move their recently bought operations, including the aforementioned headquarters, anywhere. In fact, many modern-day economists go so far as to say that the majority of companies forced to leave their older sites in well-established communities, such as Cleveland, thought that such actions represented a reasonable request. However, the facts often contradict that wide-eyed business contention. In fact, Cleveland’s premier location, competent workforce and numerous revenue sources persuaded many discerning newly-created companies to remain in that city rather than venture out to new distant places. That decision to remain in place might have always seemed the most prudent thing to do given the present financial condition of the company, in question, but it did occur repeatedly.

Ranked as one of the top Fortune 500 hubs in the U.S., from the mid-1950s onward, Cleveland’s business community repeatedly addressed the many challenges and changes affecting that area’s economic and financial well-being. Once an undisputed national leader in the production and distribution of iron ore and its multitude of profitable, steel-related products that midsized Midwestern community, by the early 1970s, made every effort at its disposal to accommodate the numerous new economic and financial demands being placed on it by the soon to be refurbished service sector. That abrupt change in business focus, at that precise moment, initiated by the undisputed champions of big business in Cleveland, directly influenced the long-term economic and financial prospects for many Fortune 500s located there. Although many of the Fortune 500 entities first recorded in Fortune Magazine in April 1955 have long since left the scene; some of the remaining businesses still view Cleveland as the premier location for their headquarters.

This writing will address three critical questions pertinent to the evolution of Cleveland’s Fortune 500 firms over those decisive years. First, what business measures did local leaders employ to deal with the many agonizing business changes that had affected their establishments over the past 65 years? Second, what did their actions during strategically important moments in their corporate history indicate about Cleveland’s desirability as a Fortune 500 center? Third, what lessons might we learn from their individual business experiences? Undeniably, economic and financial subtleties often appear larger than life when a firm begins the arduous process of choosing a new site for its headquarters. The deliberations that subsequently occur among its board members and corporate strategists frequently cover a wide spectrum of pertinent issues ranging from personal biases and judgments, at one end, to previously unfathomable bureaucratic dreams and nightmares, at the other. Multifaceted regional or national economic issues often dictate the exact course of action a company will follow at least for the immediate future. Related issues affecting that upcoming move might include very pertinent things such as projected financial gains or losses derived from such actions along with any probable lucrative tax incentives and the availability of competent local labor in the new district.

The prospects of working with a regional think tank, with the expressed intention of profiting from the jointly discovered technical advances, might also appeal to insightful Fortune 500s. Other factors such as a dependable, buying public; easy access to auxiliary businesses and reasonably priced supplies might also enter the picture. Advantageous economic and social amenities such as beautifully landscaped parks; first class restaurants and top rated movie theatres, may also play key roles in the final decision-making process. Growing accountability to majority stakeholders means that Boards of Directors must closely examine each-and-every one of the aforementioned considerations before committing any hard-earned investment dollars towards developing one site over another. This is markedly true especially when several communities offer equally satisfying amenities and tax breaks.

Nowhere was that kind of sharp, detailed analysis more imperative than during the ebullient 1950s and 1960s when an array of new economic opportunities challenged many, traditionally-held economic beliefs and financial values. Smaller enterprises often responded by regularly moving their headquarters from one place to another. They hoped that those frequent moves might, in some small way, miraculously increase their profit margins by enabling them to be much closer to consumers than would have been the case otherwise. Fluctuating market conditions at home and pronounced increases in overhead expenses and production costs prevented most large companies from following suit. Bigger operations also discovered that the demands placed on them by their many affluent customers did not change dramatically over time. Therefore, there was little reason for them to relocate their headquarters on any set pattern. In fact, the momentary economic or financial advantages that might be derived from such full-blown exercises did not seem to justify the high expenditures required to execute them in the first place.

The last three decades of the 20th century signified a period of extraordinary growth and rapid change for countless numbers of successful businesses throughout the nation. Unfortunately, that kind of fast-paced development proved to be only intermittent. Two of its memorable watersheds the Recession of 1974 and the full unfolding of Reaganomics not only appreciably thinned out much of the unwanted competition in many endeavors; but also, assured more permanent financial success for those Fortune 500s able to weather the economic and financial vicissitudes equated with that highly explosive period.

The restructuring of the federal tax code in 1985, occurring in the wake of more relaxed federal restrictions on business monopolies, inspired many Fortune 500 firms to achieve remarkably high returns year-after-year. Prodigious technical advances in such vital areas as communication, manufacturing and distribution, expressly during the late 1980s and early 1990s, appeared to more than compensate for the lackluster corporate leadership displayed by many big businesses over the last several decades. In this instance, their uninspiring leadership seemed to have downplayed, if not openly ignored similarly-inspired enlightened goals and objectives that had been in the background since mid-century.

Computer-generated information topped the list of exciting, brand new technological breakthroughs destined to not only change the course of daily business activities forever; but also, its intensity. Beginning in the late 1980s, an increasing number of innovative software packages along with a host of accessible new websites encouraged many shrewd business leaders to accumulate, disseminate and store large quantities of relevant, field-related information. The resulting electronic networks they forged represented one of the greatest single advances of the post-industrial age. From the start, computers served a didactic purpose. They motivated innumerable new ideas, which in turn, activated diverse interests to come together with the expressed intention of developing a new, wide range of relevant business strategies targeted towards very particular economic and financial needs. Specifically, those strategies would be directed towards expanding corporate wealth through the development of all-new, cost-effective business methods intended to increase productivity appreciably by among other things speeding up market to market distribution. The universal acceptance of computer-generated information encouraged many of this country’s brightest entrepreneurs to experiment with all sorts of unique communication networks. Once fully perfected, those new in-house driven communication systems significantly improved both the quality and quantity of the products and services they sold on the international market scene.

Embracing new technology, in unprecedented ways also resulted in highly lucrative new business prospects. That development occurring simultaneous with the arrival of a newly minted group of wealthy entrepreneurs, whose technical inventiveness accounted for much of the computer age’s phenomenal success, revolutionized the entire world of business as we knew it then. Those Fortune 500s able to incorporate the latest technological advances into their mundane routines generally fared much better financially than those companies that did not choose to follow that same path. Furthermore, those many practical discoveries provided some of those same Fortune 500s with the financial where-for-all so necessary should they decide to move their headquarters from older centers in the Rustbelt to newer urban communities in the Sunbelt.

Throughout the 1980s and 1990s, a growing number of analysts predicted a mass exodus of big businesses from the East Coast and Great Lakes to the South and West. They believed that groundbreaking companies wishing to capitalize more fully on the endless new economic and financial benefits, derived from their involvement within this recently expanding global market scene, would gladly lead the vanguard. In a no holds barred business environment such freedom of movement would have been prized greatly. Yet, as enticing as that new prospect might have been for nearly everyone, only a select few pursued that dream. Growing budget restraints and an unstable world economy obliged most Fortune 500s to remain at their current location. Indeed conservative business rationale had won the day at least for the immediate future.

It is easy enough to understand why conservative business thinking prevailed during the last decades of the 20th century. In numerous instances, the commodities and services produced by those Fortune 500s did not lend themselves to such all-encompassing relocation efforts. The fact that few moved to new locations did not mean that Fortune 500 firms did not use the threat of leaving an area as a bargaining chip many did just that on numerous occasions. Those relying on that well-worn business tactic generally wanted some kind of tax relief or some other local government inducement. The very idea that an influential business might even consider leaving a city or town was more than sufficient to bring corporate officials and city leaders together for some last minute discussions. In fact, some of those hastily conceived sessions did result in meaningful compromises.