Fairfax landed American Telephone & Telegraph, the nation's largest utility. Columbia lured General Motors, the country's biggest automobile manufacturer.
Yes, but Fairfax wooed Mobil, which ranks Number 5 on the Fortune 500 list; and Reston, Fairfax's new town, was backed by Gulf, No. 7. Ah, but Columbia boasts Prudential, the country's largest insurance company, and General Electric, 9th biggest industrial.
This kind of industrial braggadocio is growing apace as Fairfax County, Va. and Columbia, Md., compete for businesses to relocate in their respective areas. Full-page advertisements invite your company to be next to tap the potential of a 5-million-person Mid-Atlantic market between Washington and Baltimore. The Fairfax Economic Development Authority announces with confidence that "additional impetus for continuing strong growth in the business sector seems assured."
First, a bit of background. A number of Fairfax County companies go back to the early 1950s and maybe before; the first business moved into Columbia in 1967. But for the purposes of this comparison, the latest round in their rivalry dates from the end of the 1974-75 recession.
In late 1976, Fairfax County executives realized they needed to attract new business and clean industry to increase their tax base and shift some of the burden from the individual taxpayer. The Economic Development Authority's budget was increased by $30,000 to about $250,000 annually. The result: This year alone, AT&T, Mobil Oil and Time, Inc., have signified their intention of moving part of their operations to Fairfax.
Until this fall, Howard County left most of the business of attracting business up to the Howard Research and Development Corp., which is controlled by the Rouse Co., developers of Columbia. Its promotion budget is more than $200,000 annually. This was the due in part to opposition to the new town from some of Howard's older citizenry who wanted the county to remain rural and residential. When such opposition led to two turndowns of the Marriott Corporation's application for a theme park (a development that would have brought the county $1 million in annual revenues), a new committee was formed by some younger inhabitants to stimulate economic growth in the rest of the county around Columbia.
The committee's executive secretary is Michael Wolfe, who holds the title of county industrial development coordinator. His department has been in existence since 1960 but, according to Wolfe, its primary function had been public relations. Wolfe hopes to raise the committee's budget substantially from the current $47,000 in order to actively seek new industry, particularly electronic assembly plants or computer divisions of Washington and Baltimore corporations. Wolfe said his intention was not to oppose or compete with the Rouse Co., but rather to complement its efforts. A Rouse executive sits on his committee.
A comparison of growth rates over the past two years in Fairfax and Howard counties shows that the number of firms in Howard rose by 28 per cent compared with 19 per cent in Fairfax. Howard showed a 19 per cent increase in jobs; Fairfax, 15 per cent. In terms of occupied space, Howard showed a 33 per cent gain; Fairfax, 11 per cent.
Part of the reason Howard shows a much greater gain, it should be remembered, is because it starts from a much lower base. The number of firms rose from 299 in 1975 to 384 this year, the number of jobs from 17,350 to 20,569 , and the number of square feet occupied from 10 million to 13.3 million, according to county official Walter Henley.
In Fairfax, the number of basic business and industrial companies (excluding retail) rose from 964 in 1975 to 1,142 in 1977. Occupied building space rose to 14.5 million square feet. Employment jumped 15 per cent to 42,741 in 1977.
Nearly half of Howard's industrial development is concentrated in Columbia. There, the number of firms increased from 110 to 160 in 1977, or 45 per cent. Overall growth of industrial, commercial and retail industries was only 9 per cent, from 710 to 775. In Columbia, too, occupied space grew 25 per cent; jobs, 15 per cent.
Columbia's four industrial parks are headquarters for companies such as Owens-Corning Fiberglas, Diebold, and AMF Head Sportswear, Inc. Fully half of the operations in the parks are classified as distribution centers, including warehouses.One-fifth are manufacturing, another one-fifth research and development; the remainder, offices.
In Fairfax County, the biggest change in the past two years has been the 59 per cent increase in the number of corporate headquarters, adinistrative and marketing offices, and manufacturers' representatives. Wholesale distribution showed an 18 per cent increase, while transportation and warehousing dropped 10 per cent. Research and technical manufacturing (electronics, mainly) - still the largest category in numbers of firms and space - climbed 19 per cent.
The figures indicate that, while R&D and the supply business are holding their own in Fairfax, the number of head or divisional headquarters is rising much more rapidly. In Columbia, on the other hand, the push is toward R&D and light manufacturing. There is also considerable expansion by existing industrial firms, including foreign companies that began with small quarters initially to test the market and now are fanning out. Office leasing has lagged, although it has been getting stronger of late, according to Claiborn M. Carr III of the Rouse Co. There are about two business offices for each retail operation.
How successful is Columbia as a mid-Atlantic business center?
The easy answer is, it's too soon to tell. Yet, after all, a decade has passed since the first industrial customer moved there.It seems safe to say that Columbia has not become another Brasilia, that new city carved out of the wilderness where the Brazilian government was supposed to move lock, stock and barrel. Only it turned out too many officials preferred the life of Rio de Janeiro.
Columbia is still a small town of 45,000 persons. While it has many recreational activities, including the Merriweather Post Pavillion, it perforce lacks the cultural opportunities of Baltimore or WashingtonD. Though Fairfax County is larger and closer to the Capital than Columbia is to either city, Time, Inc., still had difficulty persuading some of its employees to leave Manhattan for "rural" Fairfax. This is true to some extent for Columbia, but as many of their companies were already in the area, the culture shock was perhaps not that much a factor.
When Hittman Associates, Inc., moved to Columbia from its cramped, crime-ridden Baltimore neighborhood in 1967, it had 85 employees and grossed $1 million a year. Today the R&D company has four divisions, employs 300 persons and does $15 million annually in sales.
"Just being here (in Columbia) doesn't mean everyone is going to beat a path to your door," said Fred Hittman. He observed that some businesses, attracted by the Rouse Co.'s enthusiastic promotion, had too great expections of growth. Hittman believes industrial growth could be more rapid, but says the lag is due to the economy, not Columbia. He wouldn't move anywhere else.
General Electric was one of those whose expectations exceeded reality. It had intended to build a large applicance park similar to its Kentucky facility. But Columbia's population did not increase as fast as predicted. Then, the recession cut plans, and employment dropped from 3,000 to 1,200. Today it numbers about 2,000.
Volvo and Toyota are both out, although for different reasons. Yet neither faulted Columbia. "We had only good experiences there," recalled Bjorn Ahlstorm, Volvo's U.S. president. However, the Swedish auto maker, which now has headquarters in Rockaway, N.J., found it could operate more cost-effectively with three instead of five warehouses to serve the East Coast. It left a service center for the mid-Atlantic region in Arlington.
Contrarily, Toyota, the leading car importer, is moving to Anne Arundel County next year in order to expand. Located in Columbia since 1970, Toyota must move to a new county to qualify as a new business to take advantage of industrial revenue bonds. Toyota plans to build a $3.5 million plant in Glen Burnie.
Columbia's primary pitch to business is location. Relocate, its promotion urges, "in the heart of the nation's fourth largest market, in the midst of 5,000,000 people" (some of whom live and work in Fairfax County, incidentally). Use of the term The Mid-Atlantic Center for business is meant to imply regional - as distinct from local - enterprises.
Columbia recently ran a full-page ad with the names of 53 companies that have established there. The vast majority of them list offices in Washington and Baltimore as well, according to the telephone book. Eight list offices only in Columbia. All appear to be divisions or branches of companies with headquarters elsewhere. However, it is difficult to tell from the Columbia roster which are regional and which are local branches. Reliance Insurance Co., for example, is regional; Prudential Insurance Co. serves the needs of the Columbia community.
Of more than a dozen past and present Columbia firms interviewed, only a minority mentioned location as a reason for selecting Columbia. One of those who did was Bob Tucker, manager of the Ehler Coffee division of Brooke Bond Foods, Inc. Ehler's which distributes to institutions, moved to Columbia from Baltimore in 1973. "It's an ideal location, as well as a nice place to live," he said. "Before, our employees considered themselves a Baltimore firm. Now we consider Baltimore-Washington one market. We have Washingtonians on our staff."
American Hospital Supply had been located in the District on D Street NW. Its principal market is in Baltimore. Since the move to Columbia in 1972, AHS has one-third more space, while sales volume has increased by 250 per cent. "How much of that was attributable to (the location of) Columbia, I can't say," manager Glen Taylor remarked.
From Columbia, ITT Grinell, which distributes pipe fittings and valves, extended its sales territory to Falls Church and McLean, considered too far from its Baltimore office. But a General Motors spokesman said the location of its zone sales office in Columbia was "relatively immaterial."
Most businessmen interviewed cited the availability of space at reasonable prices and the potential for expansion. Dr. Maxwell Hughes of Pfizer Medical Systems, Inc., said, "We looked at 14 sites. Columbia was the right size and the right price and there's excess land."
Still, several of those who left Columbia - as well as a few who remained - mentioned the town's high prices. Pirelli Tire Corp. decided it was too expensive to maintain a warehouse there. NCR found it "an unnecessary expense" to keep its systems services center there and moved it to Atlanta. American Hospital Supply's Taylor called leasing and living there expensive. Office space leases at between $6.50 and $10 per square foot. Columbia's inhabitants are affluent, with a $25,000 median income, and housing and living costs reflect this.
For the past two years, the number of commercial and retail establishments has remained relatively steady at the 600 level. Approximately 200 of these are retailers. Because many are fledgling enterprises, the turnover is high. For those that make it, like Clyde's, the Georgetown restaurant and bar, business is "super." General manager Mark Walsh says sales have been two to three times original projections. Yet, according to other merchants, the Rouse Co.'s policy of only allowing the shops it selects has proved "stifling" to downtown Columbia. In so doing, the company tries to maintain quality and a proper mix.