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Goodyear project could be biggest in Akron
By Jim Mackinnon
Beacon Journal business writer
Published on Sunday, Dec 09, 2007
The new Goodyear headquarters and East Akron redevelopment project will be no Empire State Building.
It'll be bigger.
Dollarwise, the $890 million Akron project will cost more than the $556 million it would take now to construct the iconic New York City skyscraper, put up in 1931 for $41 million.
It'll cost even more than the Sears Tower, the tallest building in the United States, which was built in 1973 at a cost of $150 million. That's $697 million in 2007 dollars.
While the deal has yet to officially close, the new Goodyear buildings and related retail center would rank among the most expensive projects Akron has ever seen — perhaps the largest, based on an Akron Beacon Journal look at other significant developments dating to the early part of the 20th century.
More importantly, the new headquarters, stores and eventual re-use of the current Goodyear Tire & Rubber Co. complex on East Market Street by developer Stuart Lichter of Industrial Realty Group is expected to generate lots of money in the city and much of Ohio, economic development experts and others say.
HOW MUCH?
''I think it would have about a $2 billion impact on the Ohio economy,'' said Bob Bowman, Akron deputy mayor for economic development.
Projections
Projections show that if all four phases of the development are built over the next seven to 10 years, about $2.15 billion annually will be generated statewide by Goodyear, the new retailers and others.
''That's the multiplier effect,'' Bowman said.
The multiplication starts with Goodyear's payroll of about $350 million, spread among some 2,900 employees and 500 contracted employees in Akron. Factor in another $500 million that Goodyear spends each year with its Ohio-based vendors, Bowman said.
Then calculate how that money goes to other businesses and helps create more jobs, and there is an estimated $1.75 billion impact that Goodyear now generates in Akron, the rest of Summit County and elsewhere in Ohio, said Bowman and Jeremy Rowan, economic development specialist for Akron.
With the new retail center up and running and the old Goodyear complex put to new use, the total payroll figures are expected to swell to $430 million annually, Bowman said. That could include some 2,000 new jobs with an annual payroll of $80 million after renovations at Goodyear's old complex.
''A lot of small- and medium-size businesses depend on these global companies (such as Goodyear),'' Bowman said.
''The impact is significant, of course,'' said Dan Colantone, head of the Greater Akron Chamber.
And that helps explain why keeping Goodyear in place has been important and why the Akron, Summit County, state and federal governments plan to spend tax dollars on such things as building and improving roads, bridges, water and sewer lines for the East Akron site.
Lichter's company, private developer Industrial Realty Group, will spend about $700 million to buy Goodyear's property, build the headquarters and take on other parts of the project.
Government and Goodyear officials in April announced Industrial Realty Group was proposing the massive, complex real estate deal. Lichter's California firm, which owns many other properties in Northeast Ohio, specializes in buying aging industrial sites and finding new uses for them. The public disclosure that Goodyear wanted a new headquarters spurred Arizona, Virginia and North Carolina to try to woo Goodyear away.
''To lose that kind of flagship would have had a devastating impact,'' Bowman said.
Akron Mayor Don Plusquellic, in calling Wednesday's announcement a ''tremendous day,'' said he remembered two decades ago when he learned that Firestone, another icon from Akron's days as the Rubber Capital of the World, was leaving.
''I've been on the other end when I get the call. (The late Firestone CEO) John Nevin came in, put his feet up on my table and smoked a cigarette and said, 'Well, I'm moving out of Akron and I just thought I'd let you know I'm going to Chicago,''' Plusquellic said. ''So I've lived through those days. This is a pretty damn good day for me.''
The mayor said that under a worst-case scenario, Goodyear's headquarters will stay in Akron and at least some retail development will be built in the project area adjacent to Interstate 76.
BELIEVING IN AKRON
Plusquellic credited Goodyear Chairman and Chief Executive Bob Keegan for committing to giving Akron first shot at keeping the company.
Keegan said there had been a lot of speculation about Goodyear's future in Akron since the April disclosure.
''And I'm sure that speculation has been borne out of some memories of corporate headquarters that have left Northeast Ohio through the past 20 years,'' Keegan said. ''I am pleased that today is very different.''
The city, county, state and private industry leaders that helped pull together the deal clearly believe in Ohio and in Akron, he said.
''And so does Goodyear,'' Keegan said. ''The state-of-the-art facilities that we're going to construct will reflect a new Goodyear, a place of bold leadership and innovation, and they will inspire, I hope, future generations of Goodyear associates.''
Goodyear and IRG expect to close on their part of the project in less than 60 days, with the city and county governments also needing final votes on their roles. Goodyear will sell most of its property to IRG, then sign a 20-year lease for the new global and North American headquarters' buildings off Martha Avenue, next to the Goodyear Tech Center, with the option to renew five-year leases thereafter 11 more times.
'SUPER PRIZE'
One person who played a significant role in persuading aircraft giant Boeing to move its headquarters from Seattle to Chicago in 2001 called Goodyear a ''super prize.''
That's ''because of its high national and international profile, said Robert Ady, a Chicago consultant. ''Even if you don't drive a car, you at least see a blimp,'' Ady said.
His business, Ady International Co., specializes in company site selection and negotiating business expansions and relocations.
The decision by Goodyear to stay put was the biggest news for Akron in his 40 years in the recruitment and relocation business, he said.
''I'm all excited, and I don't live in Akron,'' he said. Ady, who last visited Akron about a year ago, said he was not involved in the Goodyear deal.
Most corporate relocations come about because of such things as mergers and acquisitions, he said.
''Not many high-profile companies move,'' he said. People may think, ''Oh, boy, there's another one,'' but it is unusual for major corporations to relocate headquarters, he said. Smaller firms are more likely to move, he said.
''For a community the size of Akron, a company the size of Goodyear is very important,'' Ady said. ''If New York City loses one, it's not the end of the world.''
Keeping Goodyear will bring Akron ''great prestige, great positive image, great publicity,'' he said. ''All the things Akron needs, rolled into one.''
MARKETING PLANS
And that's something Team NEO, a Northeast Ohio economic development organization that works to attract businesses, plans to capitalize on.
Goodyear's decision will feature prominently in Team NEO's marketing plan, said Tom Waltermire, the organization's chief executive.
''It's an image builder,'' he said. ''We will be delighted to have that story to tell. Once the (old) Goodyear facilities are available, it becomes another asset to promote for us.''
One message that can be sent to other companies looking at Northeast Ohio is that Goodyear's executives have decided they can manage a global enterprise from Akron, Waltermire said. Any doubts someone might have about the region can be erased because ''someone credible (Goodyear) has voted with his feet,'' he said.
Jim Mackinnon can be reached at 330-996-3544 or jmackinnon@thebeaconjournal.com.
The new Goodyear headquarters and East Akron redevelopment project will be no Empire State Building.
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