AUG. 24-31, 1998
|SPECIAL REPORT CONTENTS|
Like most river towns, Columbus, Ga., has been defined over the years by the successive enterprises that have lined its waterfront. During the Civil War, the Confederate navy launched some of its best fighting ships from Columbus' dockyard on the Chattahoochee River. Through most of this century, textile mills along the riverbank were the town's lifeblood. Today, with most of those mills abandoned, a new riverfront centerpiece is rising: the $100 million headquarters for one of the world's largest processors of credit-card transactions, Total Systems Services Inc.
Total Systems is everything the old Columbus wasn't and everything the new Columbus strives to be. Its mainframe computers, powered by sophisticated software, verify creditworthiness for transactions from Bali to Birmingham. An army of skilled technical employees keep the systems running, and a world-class telecommunications infrastructure links them to customers around the world.
EVOLVE OR DIE. The 21st Century Economy proposes a simple ultimatum to many towns and cities tethered to an industrial past: evolve or die. Can Columbus adapt? Georgia's second-largest city, with 188,000 residents, has educated its workforce and internationalized its corporate roster. It has nurtured some huge employment engines like Total Systems and $6 billion AFLAC Inc. (AFL), another quintessentially global, systems-driven competitor. Together, the two companies employ more townspeople than the mills did in their heyday. Technology has enabled newcomers such as Carmike Cinemas Inc. (CKE) and Delta Data Software Inc. to make Columbus their home.
For sure, this transformation hasn't been painless. Even as employment booms in the information-services sector, the textile mills today employ only 3,814 people, down from a high of 9,000 in 1973. Layoffs last year contributed to a 42% decline in new-home construction and a 35% drop in new-home value, activity that has rebounded only slightly this year. And 23% of city residents live below the poverty line. "One thing you start to think of is, are people being left out?" frets Robert S. Johnson, dean of the business school at Columbus State University.
Even so, the city's unemployment is down to 4.8%, about the national average, from 7.4% in 1992. Employment has jumped 21% in the last decade, and population is up 4% since 1990. Why? A decade ago, Columbus' business and political elders heeded the growth of service companies like AFLAC and Total Systems, both of which have operated in town for decades. The lesson: Intellectual capital and strong communications systems were more important than looms. And skilled workers were more viable than high school drop-outs.
So Columbus invested in people, making the most of Georgia's innovative state-funded training programs. The best one, the Intellectual Capital Partnership Program, allows up to 500 Columbus State students a year to receive $10,000 loans that are forgiven if they work in Georgia for four years after graduation. Jennifer A. Collins had a dead-end staff position at Columbus Regional Health Care System and felt her sociology degree from college didn't offer her many opportunities. After graduating from ICAP, "I got out of my paper-pushing job," Collins says. She now has a $28,000-a-year job as a computer programmer at Total Systems.
"COMFORTABLE."Such strategies helped solve a labor shortage that, two years ago, had forced Total Systems to consider moving to Atlanta or out of state. Now, the company plans to expand its 3,200-person Columbus workforce to 5,000 by 2000. "A company like ours is effectively geographically independent," says Richard S. Ussery, Total Systems' chairman and CEO. "But once we felt comfortable we could get enough trained people, we decided to stay."
The city's burgeoning telecommunications network, meanwhile, has fed on itself. The presence of Total Systems, AFLAC, and Blue Cross & Blue Shield of Georgia Inc.--all big, information-dependent companies--prompted BellSouth Corp. (BLS) to equip Columbus with enough T-1 lines and frame relays to serve a city several times its size. "The Big Three have required more infrastructure from us. Columbus isn't exactly where they want to be, but they've come so far in such a short period of time because of that infrastructure," says Ted Lawrence, head of Georgia economic development for BellSouth.
That technology has made possible in Columbus what otherwise might be tenuous enterprises. Take Carmike Cinemas. The nation's second-largest movie theater chain is based in town mostly because of a driveway conversation in 1979 between CEO Michael W. Patrick and a neighbor who owned a software development outfit. Today, that software, combined with advanced telecommunications hardware, enables Patrick to sit at his desk and monitor everything from systemwide box-office receipts to a trainee's soft-drink sales in Sioux Falls, S.D. "Without the system, we would have had to move to Atlanta" and its airport, Patrick says. "And we could never have specialized in rural markets."
AFLAC, similarly, has seized on telecommunications to sell and administer health insurance products in Japan, a market that accounts for two-thirds of company profits. Its back-office processing of insurance claims and its actuarial formulations are zapped to Japan on high-speed data lines. Small companies benefit, too. And Delta Data Software, formed by a group of investors who nabbed AFLAC's former Georgia sales manager as CEO, uses high-capacity phone lines to employ dozens of programmers from as far away as Kendallville, Ind., and Tacoma, Wash. "They sign on and go to work" on the midrange IBM computer that that sits in the basement of Delta's downtown Columbus storefront, says CEO Donald W. Beck Jr.
DENIM DEAL. This is not to say that manufacturing has disappeared. Rather, Columbus is attracting new, more vigorous plants--some of them owned by foreign companies such as Matsushita Electric Industrial Co. (MC) and Marubeni Corp., which is starting up its Marubeni Denim unit in Columbus this year. The new denim operation is economically viable because the North American Free Trade Agreement allows Marubeni to ship finished denim, duty-free, from Georgia to Mexico for cutting and sewing. What sealed the deal, though, was Columbus's offer of reliable, nonunion workers, state-funded training programs, and green-field development sites. The advantages were so attractive that Marubeni did not even hold out for state or local tax incentives.
The resulting $81 million plant, just now starting production, is taking on hundreds of refugees from the vanishing local mills--and, arguably, giving them better work. Wanda J. Davis, 37, left her job as a weaver in the humid, noisy weaving room at the Bibb Co. denim mill in January, just four months before it shut down. At Marubeni, she was stunned to see the computer-operated looms producing denim at five times the rate of Bibb's old machines. "I was really amazed when I first came through," she says. After an 11-week training program covering everything from quality standards to conflict resolution to math skills, Davis now operates looms in the mill's air-conditioned weaving room. Like other Marubeni employees, her pay is as much as 40% higher than what she earned before.
The downside for Columbus' workforce: New looms like Marubeni's require just half the number of workers as old looms. But many of those left behind are working now in service jobs at places like AFLAC and Total Systems, also for more money. The base of employers is more diverse, creating a sort of insurance policy against cyclical downturns. And the town is positioned to grow with industries--financial services, entertainment, and health care--that will thrive in globalizing markets. Evolve or die? Slowly, Columbus is evolving. If it adapts successfully, the banks of the Chattahoochee could thrive for decades.
Updated Aug. 13, 1998 by bwwebmaster
Copyright 1998, Bloomberg L.P.