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Falling Dominoes

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The bombshell of the summer -- Wachovia Securities' $6.8 billion merger with A.G. Edwards — tosses a monkey wrench into the popular theory that Richmond is returning to its rightful place as a Southeastern corporate hub.

Four years ago, Wachovia's brokerage arm gobbled up Prudential Securities to become the third-largest brokerage house in the country, bringing with it more than 1,000 high-paying jobs to the region.

Built around former Wheat First boss Danny Ludeman, Wachovia Securities made Richmond home base, injecting a considerable amount of corporate pride into a region still reeling from North Carolina's raid of Richmond banks in the 1990s.

Now Ludeman will be moving to St. Louis, home of A.G. Edwards, taking with him the combined brokerage's key decision-makers. How many of Ludeman's 3,000 employees will remain in the metro region is a topic of open debate.

The company is in the throes of figuring out how many of its people will remain here, and how much of a presence the combined firm needs in Richmond. Officially, a company spokesperson says no decisions have been reached.

It's unclear in economic-development circles too. "I don't have a feel yet" for the fallout, says Gregory Wingfield, president of the Greater Richmond Partnership.

A meeting with Ludeman and other high-ranking Wachovia officials is set for mid-August, he says, when he plans to make the case for keeping a considerable base of operations here.

Even Wachovia's top Richmond executives, if they do know, aren't talking. "I haven't put a for-sale sign in front of my house," teases Marge Connelly, chief operating officer and president of Business Services Group at Wachovia Securities. She'll remain with the firm as a co-president, she says, but whether she'll remain in Richmond is still a mystery.

The merger's impact is already causing considerable heartburn, real estate sources say — and it's the wait more than anything.

At least one real estate broker says the move to St. Louis would likely be spread out: "It's a two-year window before there are any decisions," says the broker, who spoke on the condition of anonymity. "But nobody knows for sure."

The limbo, however, promises to affect some big real estate deals already in the works, City Council President William J. Pantele says. "Would there be disruption in the real estate markets? Yes," he says. "Wachovia Securities has an enormous investment here."

So far, only the firm's retail brokerage arm is confirmed as remaining in Richmond, a Wachovia spokesman told the Richmond Times-Dispatch in June. That's only about 100 people.

There are three office buildings — all high-rises between 15 and 20 stories — in the planning stages for downtown, Pantele says. If Wachovia uproots considerably, it will undoubtedly put those towers on hold as the real estate community struggles to absorb more than 300,000 square feet of first-class office space in downtown alone.

"I don't think it's a doomsday scenario," Pantele says, "but if Wachovia left only a 100 people here, it would be a body blow."

A body blow, yes, but with it there are saving graces — particularly the arrival of MeadWestvaco Corp. earlier this year, and recent moves by Philip Morris USA.

Philip Morris is consolidating its manufacturing operations in Richmond and importing hundreds of jobs with the closure of its only other manufacturing plant in the United States, North Carolina's Cabarrus County plant, which employs 2,500. It's also opening its downtown research facility on Leigh Street later this summer and plans to invest $230 million in its manufacturing facility here.

Wingfield says Philip Morris has asked his office to prepare 2,600 employee relocation packages for the North Carolina workers, most of whom probably won't make the trek across the state line. Meanwhile, the consolidation raises the importance of Philip Morris' Richmond-area operations considerably.

But it's unclear how much it lessens the sting of losing Wachovia Securities' headquarters. The Wachovia Securities/A.G. Edwards merger signals the loss of the last top-tier Richmond financial institution, a source of pride that's difficult to replace.

Pantele, for his part, is pushing for a full-court offensive press and has been talking with area business and political leaders in hopes of retaining as many Wachovia jobs in Richmond as possible.

"What I am concerned about is we cannot sit idly by and wait for events to unfold and hope for the best," he says. "This is a time when you've got to be working double hard to make silk out of a sow's ear. I think we've got to fight as much as we can." S

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