Commentary: VF headquarters shift sparks memories of RJR’s split

 In September 2018

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Commentary

Small can be beautiful, as seen in the inspiring stories we’re publishing this month about young businesspeople in some less populous N.C. hamlets. Many of those profiled are building their careers and businesses in areas with flat or declining population.

That’s directly counter to the megatrend in which a few metro areas are accounting for much of U.S. economic growth. North Carolina benefits because Charlotte and Raleigh-Durham rank among the markets that are particularly attractive to innovators such as Pendo CEO Todd Olson, profiled on Page 12.

By comparison — and it is an unfair comparison — the Winston-Salem-Greensboro-High Point region isn’t showing the same vitality. Inc. magazine’s 5,000 fastest-growing companies included seven Triad businesses, compared with 56 in the Charlotte area and 49 in the Triangle. In the first half of 2018, $2.5 billion in residential building permits were issued in the Charlotte area, five times the level in the Triad.

This isn’t new, of course. But VF Corp.’s decision to move its headquarters to red-hot Denver is a milestone eerily reminiscent of RJR Nabisco’s move from Winston-Salem to Atlanta in 1987. Just as RJR Nabisco CEO Ross Johnson wanted a fresh environment, VF CEO Steve Rendle says Greensboro wasn’t the right match for the apparel company’s ambitions.

As in the late ’80s, the bigger concern is whether VF’s move signals a lack of confidence in the Triad’s attractiveness to agenda-setting CEOs and companies.

A native of Spokane, Wash., Rendle says the move will consolidate The North Face and activewear businesses in Colorado, a state known for its outdoor enthusiasts. Tom Dempsey, founder of Brevard-based camper maker SylvanSport profiled on Page 60, is working hard to get North Carolina in that game.

The upside for Greensboro is that it will host VF’s spinoff company that holds the Wrangler and Lee brands. About 85 corporate jobs will move here to sell jeans as Rendle and about 85 highly paid execs head west. While 75% smaller and growing more slowly than the rest of Denver-bound VF, the jeans unit remains highly profitable with gross margins of 40% while providing firepower for the company’s growth.

The suggestion that Greensboro isn’t an adequate location for a cutting-edge apparel and design company is far-fetched. Under staunch Triad advocates Mackey McDonald, CEO from 1996-2008, and Eric Wiseman, who was CEO from 2008-16, VF’s sales and profits soared. With Rendle leading The North Face from 2004-11, Wiseman created a “great global company that is ready to face the challenges the next 10 years will bring,” retail industry analyst Walter Loeb wrote in Forbes in late 2016.

Rendle pushed back at that analysis. VF had experienced six quarters of flat or no growth, with the stock declining 40% before he became CEO, he told the Triad Business Journal in July. Since then, shares have more than doubled.

After VF accepted $27 million in incentives over the next eight years from Colorado, Rendle alerted state and local officials. It was too late to respond.

Asked about VF’s decision, Piedmont Triad Partnership CEO Stan Kelly says, “I have only one rearview mirror, and it’s in my car.” With the Triad’s abundant universities, increasingly attractive center cities and moderate living and business costs, we share Kelly’s optimism that better days lie ahead.

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