Thursday, May 30, 2024

Creative destruction

Suppose your stockbroker called on Jan. 17, 2000, giddy over the news that drug-industry giants Glaxo Wellcome and SmithKline Beecham were merging in a $68 billion deal. Let’s buy some shares in the big Research Triangle Park employer, he said, and, because we want a diversified portfolio, let’s add some Bank of America Corp., the giant Charlotte bank that shocked the world with its own $62 billion deal two years earlier. And, because we love each of North Carolina’s three major metro areas, let’s play it safe and buy shares in old reliable Wachovia Corp. of Winston-Salem. It would have been a noncontroversial investment strategy. And a very poor one: Today, GSK and BofA shares trade for at least 15% less than when the broker called. And we all know how Wachovia turned out.

Had anyone realized that GSK, BofA and Wachovia would be such a hot mess 15 years later, surely the outlook for North Carolina’s economy would have been worse than dismal. Because of their economic impact and civic-minded cultures, the three companies, along with IBM Corp., have shaped North Carolina as much as any other corporations or politicians over the last half-century. It is hard to imagine Charlotte without former BofA CEO Hugh McColl Jr., or Research Triangle Park without Glaxo execs Bob Ingram or Ernie Mario or Charlie Sanders. It’s equally hard to imagine what the state’s cultural community would look like without the tens of millions of dollars donated by the three companies.

But isn’t capitalism an amazing thing? North Carolina’s outlook is equally or more rosy now than in 2000, a credit to a more diverse economy that continually overcomes big obstacles and world-renowned research universities that are becoming more effective in sparking growth. In particular, Duke and Wake Forest appear stronger than ever as they wield the reins of power in Durham and Winston-Salem, respectively. Ed Martin’s story this month examines GSK’s situation in the context of North Carolina. Perhaps the clearest explanation came from prominent tech investor Christy Shaffer, who describes “the circle of life,” in which dozens of former Glaxo, Burroughs Wellcome and GSK scientists and executives have formed promising new ventures. Some  have proven very successful, and others are on the path to cashing in. As summer sensation Donald Trump explains, someone needs to get rich for the economy to expand.

To be sure, it’s disappointing that GSK doesn’t officially call its RTP site a research center anymore, and BofA has moved most of its top executives out of Charlotte, most recently the chief financial officer post. Neither company pretends to exert as much influence as in the past. But together, they still employ more than 24,000 people in the state, while proving over the last 45 years that North Carolina can play at the highest levels of international business. Their struggles, which reflect the dangers of hubris and complacency, have opened the door for more nimble, hungrier competitors. Perhaps your broker will suggest a couple of them on his or her next call.


David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at

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