The News Tribune (Lite) - Positive signs, no prediction in fight for Russell

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Section: Dan Voelpel

Positive signs, no prediction in fight for Russell

DAN VOELPEL; THE NEWS TRIBUNE
Last Sunday I wrote about the prospects for Russell Investment Group to move its corporate headquarters out of Tacoma. Now, let me answer a few of your questions.

One theory suggests corporations locate where their top executives live. Where do Russell’s top executives live?

Many live around the world. A Russell spokeswoman wouldn’t release the information, citing privacy issues. However, based on an online database search of those who work in Tacoma, here’s what I could find:

• Craig Ueland, president and CEO, Three Tree Point neighborhood of Burien.

• Michael J. Phillips, chairman of the board, University Place.

• Hal Strong, chief operating officer/chief financial officer, Broadmoor neighborhood of Seattle.

• David Grieger, chief marketing officer, Seattle.

• Greg Stark, co-managing director of the Americas, Seattle.

• Mark Hansen, co-managing director of the Americas, Vashon Island.

• Thomas Hanly, chief investment officer, Tacoma.

• Kelly Haughton, strategic director for Russell indexes, Gig Harbor.

• Ernest Ankrim, chief investment strategist, Tacoma.

• Monica Butler, managing director of U.S. consulting group, Gig Harbor.

• Randy Lert, chief portfolio strategist, Tacoma.

• Deedra Walkey, general counsel, Lakewood.

• Greg Gilbert, managing director of implementation services, Fox Island.

How about Russell’s associates? Where do they live?

Using 2005 records Russell submitted to the state Department of Transportation, the City of Tacoma came up with this analysis of where associates who work at the headquarters building live:

• Tacoma/Lakewood/Uni-versity Place: 44.1 percent.

• Puyallup/Sumner: 18.2 percent.

• Gig Harbor/Peninsula: 13 percent.

• Seattle/Edmonds: 7.2 percent.

• Kent/Eastside: 6.7 percent.

• Federal Way: 3.6 percent.

• Southeast: Spanaway/Graham: 3.6 percent.

• South: Olympia/Steilacoom/DuPont: 3.4 percent.

• Vashon Island: 0.2 percent.

You indicated Russell associates serve on the boards of at least 22 local organizations. That many?

Here’s the list – and some boards have two or three Russell members: American Red Cross, Cascade Land Conservancy, Downtown Tacoma Local Development Council, Economic Development Board of Tacoma-Pierce County, Foss Waterway Development Authority, Grand Cinema, Greater Tacoma Community Foundation, LeMay Museum, Metro Parks Business Advisory Council, Museum of Glass, Tacoma Area Coalition for Individuals with Disabilities, Tacoma Art Museum, Tacoma Opera, Tacoma Philharmonic, Tacoma-Pierce County Chamber of Commerce, Thrive By Five, United Way of Tacoma-Pierce County, University of Washington Tacoma Advisory Board, UWT Milgard School Advisory Board, Washington Women’s Employment and Education, World Trade Center, Zoo Society.

What most makes you think Russell will leave Tacoma?

A company like Russell succeeds primarily because it has incredible brainpower in its pool of associates. That means the No. 1 question Russell’s executives must answer is, “Where can we best attract the talent we need to succeed over the next 25 years?” Tacoma has made notable strides in the last 10 years to make itself, its neighborhoods and its nightlife more attractive to the young creative class crucial to Russell’s success. However, Seattle has Tacoma beat in the breadth of restaurants, entertainment choices, major league sports and other amenities young professionals want.

And Russell’s human resources recruiters know that. Go to www.russell.com’s careers section and see how much more digital ink they devote to Seattle’s allure than Tacoma’s. The section ends with, “Seattle offers a quality of life that’s hard to top, and is regularly selected as one of the top cities to live in (in) the United States.”

What most makes you think Russell will stay in Tacoma?

I wish I could pick one thing to identify as a can’t-miss reason. I can’t. If the company stays in Tacoma, it will come down to a combination of factors:

• The historic link to the company’s birthplace.

• A suitable-sized site to accommodate operations.

• The better affordability of quality housing for Russell associates in the Tacoma area compared to King County.

• The desire by Russell leaders to limit commute headaches for associates – most of whom live in Pierce County.

• A feeling among Russell’s executives that the Tacoma community respects the company’s value and wants it to stay.

• An ongoing commitment by the area’s three major universities – Pacific Lutheran University, the University of Puget Sound and UWT – to bolstering their business academic tracks to support Russell’s talent needs.

Beyond those factors, consider that this year Fortune magazine honored Russell’s parent company, Northwestern Mutual, as one of America’s Most Admired Companies. Where does Northwestern Mutual have its HQ? Milwaukee, slightly bigger than Seattle but hardly a hotbed of high finance. So we shouldn’t encounter a corporate mindset predisposed to jilt its hometown for brighter lights in a bigger city.

Do the leaders in Tacoma’s business community and government really understand how important it is to keep Russell in town?

I think so. Like any significant issue, you always hope your leaders see it coming so far in advance they can act before it becomes a crisis. Some good things have happened so far:

• The City of Tacoma’s employee pension fund now invests with Russell, finally.

• City Manager Eric Anderson has enlisted help from the state’s congressional delegation to explore potential federal funding for an expanded streetcar and parking network for Tacoma.

• The Executive Council for a Greater Tacoma, whose members include the CEOs of the area’s largest companies, have made retaining Russell a priority.

“From the community’s standpoint, everybody feels very strongly about the value of the Russell company here and would be very disappointed if they chose to leave,” said Melanie Dressel, CEO of Columbia Bank and co-chair of the Executive Council. “I think everybody is working very hard to make it an easy choice for them to stay here.”

What happens to Russell’s headquarters building if the company moves out of it?

Ilahie Holdings of Seattle owns the building. Ilahie’s parent company, Saltchuk Resources, Inc., also owns Foss Maritime Co. and Totem Ocean Trailer Express, which both have Tacoma operations. Ilahie President Nate Dreon says the 12-story building would best serve one tenant. It would take some significant remodeling to break it up to serve multiple tenants. Consequently, Dreon and others have heard speculation that a government agency – perhaps the City of Tacoma, the Port of Tacoma or Pierce County – could occupy the building.

That could soften the blow, whether Russell moves elsewhere downtown or out of town.

On one hand, you lose the property tax payments on a $63.7 million building if a government entity moves in. On the other hand, an empty building means the downtown market spends the next five to seven years waiting until corporate office users gradually fill it. Meanwhile, a full building – even occupied by government – makes it more likely that a private developer would build new class A office space downtown.

What does your gut say will happen?

My ample gut routinely lets me down as a prognosticator. When Krispy Kreme Doughnuts’ stock sold for over $42 a share three years ago, I predicted in this newspaper the stock would go up. You can buy it now for less than $4.

Bruce Kendall, president of the EDB, tells me, “It’s human nature to react pessimistically” to news that Russell might leave town.

“I’m very optimistic without hesitation,” he said. “We have a true shot at it. That’s all you can ask for.”

Dan Voelpel: 253-597-8785

dan.voelpel@thenewstribune.com