city that works -
Convention centre, transport hub, focus for hi-tech industry and a great place to work or just to visit, more and more companies are coming to see Chicago as their kinda town
The decision by Boeing last month to move its corporate headquarters to Chicago is a high-profile indicator of the extent to which the Windy City is coming to be regarded as the business heartland of America. Chicago is the city of choice for a growing number of corporations. Fortune magazine ranks it third on its list of America’s Top Cities, after New York and San Francisco, based on factors such as the overall business environment and quality of life. Significantly, Fortune also asked top-level executives where they actually enjoyed doing business. There are certainly few places that can match Chicago’s impressive list of blue-chip companies, with big names such as Ford, McDonald’s, Sara Lee, Motorola and Wrigleys.
The city is second to Washington DC in terms of the number of foreign consulates based there, a recognition of its standing overseas as one of America’s leading business hubs. Over the past decade, Chicago has witnessed considerable change. Around half a million new jobs – 50 per cent in the business services sector – have been created in the metropolitan area. Downtown housing construction has risen from almost zero to 5,000 units annually, and there has been a rash of massive new offices appearing on the skyline, with more to come. The city is also enjoying a retail sector boom Recognised as the number one spot in the US for conventions, conferences and exhibitions, Chicago’s growing reputation as a hot tourist destination is aided by its vibrant art and culture, and striking architecture – the country’s very first skyscraper has its origins here. The city’s musical heritage harkens back to the famous jazz and blues clubs of the 1920s. Its Midwest location on the shores of Lake Michigan, makes Chicago an ideal base for both American and foreign companies.
There are excellent road and rail networks and O’Hare International Airport, the second-largest in the country, has been voted Best Airport in North America by readers of the US edition of Business Traveler International Magazine. Chicago’s mayor, Richard Daley, says he is committed to maintaining the city’s position as “the nation’s transport hub”. The attraction of Boeing to Chicago is a personal triumph for Mayor Daley and for the governor of Illinois, George Ryan. They joined forces to pursue the aerospace giant with the same determination they used to win commitments to the city from Ford Motors, Solo Cup and American Trans Air (ATA). Boeing picked Chicago for its move from Seattle over two other contenders, Denver and Dallas. The firm’s new corporate HQ, to be located in downtown Chicago on the banks of the Chicago River, is expected to be operational in September.
Real estate is in its eighth year of record-breaking transactions
“We are continually looking for new opportunities to get businesses to start up, expand and relocate to Chicago,” says Mr Daley. “ATA and Ford were persuaded to expand here through the joint efforts of the city and the state of Illinois.” Governor Ryan says: “The central location, global access, cultural diversity and strong work ethic make this an ideal place for companies looking to expand. Boeing’s decision underscores the fact that we have a tremendous quality of life and terrific people in the workforce.” He quotes consulting firm Arthur Andersen’s estimation that Boeing’s presence in Illinois will contribute almost $5 billion to the local economy over the next 20 years. Chicago officials are already working to build on their success, targeting a further 20 companies whom they hope will follow in Boeing’s footsteps. “A shakeout is taking place among the great cities of the world to determine which one will dominate business and the cultural climate for the foreseeable part of this century,” says Paul O’Connor, executive director of economic development group World Business Chicago. ATA has opted to build a $110 million training and operations centre near the city’s Midway Airport, which has become the airline’s hub. Meanwhile, Ford is to build a $400 million, 155-acre park, which will provide a home for its automotive parts suppliers.
It will be located close to its assembly plant on Chicago’s southeastern side. In a further vote of confidence in the city, Sears, the nation’s second biggest retailer, opened a new full-line store in the middle of downtown Chicago last month – not quite the company’s biggest but certainly one of its most visible and prestigious. Chicago is home to about three million people. A further eight million live in the greater metropolitan area, making it the third-largest metropolis in the US. It also likes to call itself the City of Broad Shoulders because the name Chicago originates from an Indian word meaning ‘strong’ or ‘great’. Mayor Daley emphasises the diversity of the city’s economy, ranging from manufacturing, finance, conventions and tourism, to transport and high technology. In office since 1989, he has won a national reputation for developing innovative, community-based programmes to address crime education and neighbourhood regeneration. Chicago has grown to become the fourth-largest hi-tech region in the US. Since unveiling his Chicago Technology Initiative a year ago, the mayor has invested $50 million in the development of the industry. In return the private sector has invested in excess of $500 million, creating more than 3,400 new jobs. “When it comes to hi-tech, Chicago has made impressive progress in the last two years alone,” says Mr Daley. “We have become competitive in a volatile marketplace with other states and cities that have been successful for years, if not decades. “Chicagoans believe in our city – and the world is excited about Chicago,” he adds.
“Many of our neighbourhoods have undergone a rebirth, helped by the investments we’ve made in community anchors – our schools, parks, libraries, police and fire stations. “Our downtown, which not so long ago was floundering, is alive with new energy and new activity. Commercial and industrial estates, which had declined with fading industries, have been revived thanks to opportunities provided by our diverse economy and the new economy.” Chicago is in its eighth consecutive year of record-breaking real estate transactions – totalling $6.2 billion. Millie Rosenbloom, president of Habitat Brokerage, one of the city’s largest estate agents, says: “We are experiencing a lot of new developments in all types of property. “No high-rises have been built in Chicago since the early 1980s, but today 30 and 40-storey buildings made up of 200-300 apartments are being constructed. We are also seeing the conversion of old industrial loft buildings, retail outlets and offices into flats.” Ms Rosenbloom, who is also president of the 7,500-member Chicago Association of Realtors, the third-largest in the US, says commercial office buildings are almost entirely occupied, with a vacancy rate of eight per cent. David Latvaaho, senior managing director of Cushman & Wakefield estate agency, says: “Chicago is fortunate to have a very diversified economy and strong economic underpinnings. You are never going to see the dramatic swings that you get on the west and east coast.”
- Marketing a great place for doing business -
Chicago’s success story is relatively unknown around the world, according to Paul O’Connor, executive director of World Business Chicago (WBC). “Everything is here that you could need to run your business,” he says. “It is also the perfect place to run a North American headquarters, especially if you’re counting in euros.” WBC is a non-profit organisation linking the public and private sectors headed by Mayor Daley. Its board of directors comprises some of the top multinational corporate bosses in the country, and its mission is to build the best city in the world in which to live, work and play. The organisation aggressively markets Chicago’s competitive advantages – it’s location, it’s diversity, it’s people – and is presently looking to build on the city’s already strong technology credentials. “Chicago is the e-consulting capital of North America. Seven of the top 34 e-consulting firms are headquartered here,” says Mr O’Connor.
“We have the only economy I am aware of that continues to defend diversification as the primary means of going forward, as opposed to niche-fitting. “Unlike Silicon Valley, we have a large and diverse measure of customers. Technology is allowing us to maintain our competitive edge.” It has a long tradition of using hi-tech in the manufacturing sector to promote wealth generation. “Our historical roots are the application of technology to profitable purpose,” he adds. “We quietly go about making money with it.” Gerald Roper, president of the Chicagoland Chamber of Commerce, which boasts a membership of 2,600 companies, says the presence of international firms is helping to promote the city around the world. “The diversity of this economy is our strongest point. When there is a downturn, like Silicon Valley and the financial markets of New York are experiencing, Chicago is the Steady Eddy.
The city has always been strong because we have a good manufacturing and services base.” The need to attract more foreign investment from Europe and Asia is the next step towards raising Chicago’s profile. “Our focus is to position Chicago as the most business-friendly city in the world,” Mr Roper says. David Kay, president of the British-American Chamber of Commerce, says: “During the past 18 months there has been an increase in the number of British firms looking at the Midwest and the Chicago markets. “There is big potential here and Chicago has the advantages that it’s an extremely well-run city and it changes with the trends. Another major advantage is that we speak the same language.” In April the British-American Chamber of Commerce held its annual convention in Chicago – the first time that it had staged it outside outside New York. America’s fastest-growing stock market is supporting a flourishing financial services sector. The Chicago Stock Exchange (CHX), founded in 1882, is the second most active in terms of share and trade volumes in the US, trading more than 4,400 New York, Nasdaq and Chicago-exclusive issues.
Recently appointed chief executive AD Frazier Jnr, the former US head of Investco, is naturally keen to continue this success. Mr Frazier, who took on his new role in March, says he wants to promote the exchange as a type of brand name. He aims to build on its ability to offer efficient, inexpensive and high quality services to investors, as well as raise its overall profile. Above all he is determined to retain the elements that have enabled the stock exchange to post record-breaking results year-on-year for the past five years. In the firm’s most recent annual report, the CHX reported $3.8 million in cash and equivalents, while net income was $4.5 million on revenues of $71 million. He has effectively ruled out any plans to make the market public, a growing trend elsewhere. The Chicago Board of Trade, the world’s oldest derivatives exchange, was founded to trade in grain commodities. Established in 1848, the CBOT listings were later expanded to include financial futures and options. Last year, CBOT installed an electronic trading platform, although the open outcry method of trading continues. Chairman Nicholas Neubauer says: “We are going to offer and support two platforms for trading and let the customer choose, but because open outcry is a core business we’re going to make sure that that is technologically enhanced to the greatest degree we can.”
At the heart of the thriving local economy is the banking sector, a counter to the financial powerhouse of New York. James Dimon, chairman of Bank One Corporation, America’s fifth-largest bank, says it is important for a big city to have a vibrant banking community. “Creativity has always been a big part of financial services, and Chicago has been a hotbed of originality during the past 20 years,” he says. LaSalle Bank, part of the ABN Amro Group, has been serving small businesses and mid-ranking firms in the city for more than 70 years. Chairman Norman Bobbins says that it has been positioned as a local bank with an international parent. “In 1980 you could not find LaSalle Bank in anyone’s statistics, as we were so small,” he says. “In 2000, we are the number-two bank in the city.” LaSalle Bank has just notched up its 17th consecutive year of record earnings. “We have come a long way because we have had a strategy and we have stuck to it,” adds Mr Bobbins. “We know where we want to go and we have been very focused.”