The Triad took another blow on Monday when VF Corp. announced plans to move its global headquarters to Denver by early next year.
The move by the Greensboro apparel marketer has been somewhat softened by the prospects of the company basing its jeans and outlet business in the city and moving its Lee brands to Greensboro from a suburb of Kansas City.
The spin-off will be known temporarily as NewCo, with the separation projected to be completed by mid-2019.
Just like R.J. Reynolds Tobacco Co. (temporarily to Atlanta), Lowe’s Cos. Inc. (from North Wilkesboro to Mooresville/Lake Norman) and Krispy Kreme Doughnuts Inc. (to Charlotte with most senior leadership), VF has decided its headquarters should be where there is a strong cultural fit and where it believes it can attract and retain the best talent.
In each instance, respective local economic and elected officials appeared to have had little chance of persuading the companies to stay put.
For example, Krispy Kreme confirmed Dec. 7 that its future requires having a presence in Charlotte and London, while shrinking its Winston-Salem workforce. “We will maintain our global headquarters in Winston-Salem while creating new work spaces that reflect our ambition,” spokeswoman Cassandra Williams said.
VF appeared to have different cultural messages for different audiences in its announcement.
In the VF corporate announcement, it briefly mentioned the moving of the global headquarters and those of its The North Face, JanSport, Smartwool, Altra and Eagle Creek brands, which represent in total about 800 jobs.
“Locating these brands, along with select VF leaders, at the base of the Rocky Mountains will enable us to accelerate innovation, unlock collaboration across brands and functions, attract and retain talent, and connect with consumers,” Rendle said in the company statement.
“We’re proud of our Greensboro roots and remain committed to the community, including a strong on-going employment presence.”
The jobs implications for VF could be a relative wash with total VF and NewCo employment in Greensboro remaining “at about current levels,” Rendle said.
Currently, VF has about 1,300 employees in Greensboro, “which includes associates at VF’s world headquarters and at our Jeanswear location,” spokeswoman Vanessa McCutchen said.
By contrast, in a joint news release with the Colorado Office of Economic Development and International Trade, VF’s tone was noticeably more upbeat.
“Colorado is an area with an unrivaled heritage and culture of outdoor and activity-based lifestyles, as well as a thriving business environment,” Rendle said in that statement.
“It is a great strategic fit for our business, and we are excited to be relocating our headquarters and several brands to the metro Denver area next year.”
It didn’t hurt that Colorado is offering up to $27 million in incentives over eight years based primarily on job-growth projections.
More changes possible
VF is not the only corporate operational hub challenge facing the Triad.
On Thursday, National General Insurance Co. said it is considering either a 626-job expansion in Winston-Salem, which would increase its workforce by 50 percent to more than 1,876, or moving its operations to one of three other corporate sites.
National General is requesting $335,563 in incentives from Winston-Salem, likely a similar amount from Forsyth County, and state incentives to stay and expand.
In April 2012, Inmar Inc. had a similar stay-or-go decision.
Inmar chose to expand in Winston-Salem and add 212 jobs for a work force of more than 920 employees. It had considered moving to Atlanta because of perceived better odds for attracting talent. Inmar is eligible for about $7.5 million in local and state incentives.
VF said at least 85 global headquarters jobs — read senior-level, six- and seven-digit income employees — are Denver bound in early 2019.
Lee has fewer than 100 jobs, many likely to pay less than the jobs departing the Triad.
For example, Rendle made $1.1 million in salary, incentive pay of $2.41 million and total compensation of $13.74 million in fiscal 2017.
Scott Baxter, named as chief executive of NewCo., made $725,974 in salary, $951,600 in incentive pay and $3.86 million in total compensation in his current role as group president of outdoor and actions sports Americas.
Perhaps the most relevant question is how big will the jeans company start out and how much of a connection will it continue to have in local community activities.
For fiscal 2019, VF is projecting the jeans company would generate $2.5 billion in annual revenue and low single-digit growth, leaving VF with $11 billion and high single-digit growth.
Roger Beahm, executive director of the Center for Retail Innovation at Wake Forest University School of Business, said the spin-off could be advantageous for the jeans brands in becoming the sole focus on the new company.
“It doesn’t seem this move is being done for lack of a jeanswear buyer right now as much as it is a way to give Wrangler and Lee the freedom they need to invest in their own future,” Beahm said.
As to be expected, some local economic and elected officials tried to put the best face forward on the pending departure.
“The impact VF has made on this community is immeasurable and that will continue as it will keep a number of its teams here in its Greensboro office,” Mayor Nancy Vaughan said in a statement. “We look forward to a long relationship with this new venture.”
Stan Kelly, president of Piedmont Triad Partnership, said VF’s decision to separate into two independent publicly traded companies “is grounded in sound business strategy and logic.”
“While the loss of VF global headquarters will be mitigated by the relocation of the Lee Jeans operations to the Triad, it is disruptions like this that highlight the importance of continued focus on entrepreneurship, innovation and game-changing projects at our airports, regional megasites, industrial sites and research parks.”
Some analysts questioned the need for VF to move to Denver for enhanced outdoor culture given the proximity to the mountains and the beach from Greensboro.
“Given that about every sort of desirable outdoor recreational and physical environment you can find is near Greensboro, and its strategic location along the heavily populated Eastern Seaboard transportation corridor certainly has its attractions,” said Tony Plath, a retired finance professor at UNC Charlotte.
“The one clear advantage that Denver has over Greensboro is its reputation as a hip recreational destination, which will make it easier for VF to attract the sort of millennial talent that can support corporate growth and promote its corporate image over time.”
Keith Debbage, a professor of geography and sustainable tourism and hospitality at UNC Greensboro, said “you cannot sugarcoat this. It is terrible, terrible news for Greensboro and the Triad.”
Debbage added: “VF was one of the unrivaled gold stars of the Triad economy, so to lose the global headquarters would be a hammer blow.”
Debbage said the combination of “high-wage jobs, high-level prestige and a significant corporate presence in our community all diminished with one simple announcement.”