BusinessTN

America’s 71st largest company relocates its corporate headquarters, bringing to your city 94 executive jobs with a median income of $128,103 and providing proof to the world of the quality of life and ease of doing business in your area. Sounds like the perfect economic development package delivered with a bow on top. But in fact what the city of Memphis got as a result of the relocation of International Paper’s corporate headquarters to the Bluff City is a decidedly mixed bag. The world’s largest paper and forest products company, which already employs over 3,000 in Memphis, is indeed bringing its top brass to town this summer. But it is also in the midst of a massive restructuring, trimming divisions and jobs that will result in a company perhaps half its size two years from now.

Amy Sawyer, IP’s media relations manager, states in an e-mail that the company has sold off divisions in the past that involved Memphis-based employees. But those were “smaller scale divestitures,” Sawyer writes, that “won’t be indicative of what the end result will be” of IP’s current restructuring.

Company officials have stated publicly that as many as 1,000 Memphis-based employees could lose their jobs or be working for a different company by the time the restructuring is complete. As a result, chamber and city officials are gearing up to woo potential bidders for IP divisions that the company sells or spins off in an effort to keep those jobs in Memphis.

“There is a tremendous challenge and opportunity to keep any jobs that might spin off,” says Mark Herbison, the Chamber’s senior vice president of economic development.

Regarding those parts of IP’s business that will be sold, the odds of maintaining them in Memphis aren’t promising. A company trying to vertically integrate might add an IP division and be convinced to maintain the business in Memphis. But in all likelihood, buyers will be established forest products companies shopping for assets and product lines to fold in to existing operations.

One relocation expert tells Business Tennessee that while it makes sense for chamber officials to cozy up to IP suitors given the chance “lightning might strike,” their efforts amount to “a valiant attempt to make a silk purse out of a sow’s ear.”

For a city in dire financial straits, the work that Memphis chamber and city officials did to attract IP’s headquarters was an admirable achievement. But amidst the trumpets and hurrahs, one particularly salient point has been underemphasized—their work has really just begun. feedback: ruble@businesstn.com

In the News

Circle K Stores purchased 26 Memphis area BP gasoline stores from Couche-Tard Inc. making Circle K the second-largest convenience store operator in Memphis behind MAPCO.

The budget deficit for the City of Memphis was announced to be $25.8 million—more than double the amount previously announced. Covering the shortfall depleted the city’s reserve fund to under $600,000. Officials attributed the miscalculation to faulty accounting and forecasting by Mayor Herenton’s previous finance administrators. Standard & Poor’s promptly lowered the city’s bond rating from AA to A+, keeping its negative outlook in place.

Cooper Realty Investments (CRI) closed on its $63 million sale of the 338,000-square-foot Crescent Center to IPC US REIT, a Toronto-based group. CRI owned the building with the Arkansas Teacher Retirement System. Together, those entities purchased the building for $39 million.

Starting in 2007, FedEx will no longer be the title sponsor of the PGA Tour’s FedEx St. Jude Classic, ending a 21-year run. Texas-based Stanford Financial Group will assume the title sponsorship. A Stanford affiliate owns Springfield, Tenn.-based golf bag maker Datrek Miller International. FedEx will continue as the event’s presenting sponsor, which will be called the Stanford St. Jude Classic. Additionally, the PGA has established a season-long points bonus program for players called the FedEx Cup.

Libertyland’s executive officers recommended closing the amusement park. Simultaneously, a proposal to reinvigorate part of the Mid-South Fairgrounds as a public recreational complex was presented by private investor Kerr Tigrett. Under the plan, Liberty Bowl Memorial Stadium and the Mid-South Coliseum would remain while new athletic fields for use by the University of Memphis and Memphis city schools and an action sports park for biking and skateboarding would be developed.

Minneapolis-based Medtronic Sofamor Danek, a medical device maker, ann- ounced plans to build a six-story, 180,000-square-foot office building and create 400 to 500 new jobs at its existing campus near Memphis International Airport. In addition, the company plans to build a 200,000-square-foot warehouse in Memphis. Medtronic currently employs 1,500 people locally.

Supporters of a proposal to turn the Pyramid into a $100 million aquarium called “AquariuMemphis” withdrew their proposal. A team of national consultants advised the city that the best use of the property, now long vacated by the Memphis Grizzlies professional basketball team as well as the University of Memphis basketball program, would be to site a major retailer—Bass Pro Shops in particular—in the building.

Memphis voters overwhelmingly ap- proved in a November referendum a ballot measure to allow Southland Grey -hound Park in West Memphis to expand its electronic gambling options. Company officials say the dog track is now re- positioned to succeed following years of fighting a losing battle with Tunica casinos. A $15 million to $18 million-track renovation is planned.

BY THE NUMBERS

Homes and the Range

Average price of a 2,200-square-foot, four-bedroom, two-and-a-half bath home

$148,225 (Knoxville) most affordable in the state, 10th most affordable in nation

$176,125 (Memphis) 50th most affordable in nation

$198,000 (Nashville) most expensive in the state, 56th most affordable in nation National average $354,372

Source: Coldwell Banker Real Estate Corp. Annual Price Comparison Index of homes considered typical for middle-management transferees in 348 markets in the U.S. and Canada.