County may lose ArmstrongvHead office is Lancaster’s sole Fortune 500 companyv

County may lose Armstrong
Head office is Lancaster’s sole Fortune 500 company
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The reorganization of Armstrong World Industries Inc. eventually could rob Lancaster County of its lone Fortune 500 headquarters. That was the possibility raised by Michael D. Lockhart, who became chairman and chief executive officer of the building products manufacturer in August 2000.
“In some way, yeah, that could wind up outside Lancaster,” Lockhart said of Armstrong headquarters. The company has been a county fixture for more than 140 years and a major employer.
Moreover, Lockhart said, Lancaster County is unlikely to woo a new Fortune 500 company to its soil.
“You wouldn’t locate a business in Lancaster today,” Lockhart said, citing poor transportation connections.
Though Lockhart raised the possibility of a Lancaster without Armstrong, he also gave reasons why company operations were likely to stay put.
A move might not be economical, Lockhart said. And, he added, the company would be reluctant to leave behind knowledgeable and talented employees. “It just doesn’t make sense to move a corporate headquarters,” he said.
Observers hoped the latter was the more likely scenario under the reorganization plan designed to end Armstrong’s nearly two years in bankruptcy protection. (See related story, p. 21.)
“I think the most encouraging thing
for the Lancaster community is the company continues to operate as a whole entity,” said William W. Adams, who was Armstrong’s chief executive from 1986 to 1993. “There were scenarios, I would guess, in which the company would be broken up into individual entities.”
The loss of a major corporate headquarters would be a blow to the county, Adams said. “The reason that’s bad is it takes out a number of highly paid, highly talented people who are also contributors to the community and community activities,” he said.
Adams declined to comment on Lockhart’s remarks on county prospects for attracting another Fortune 500 company.
Craig Zumbrun is executive director of the South Central Assembly of Effective Governance, which promotes regional cooperation in this area.
Zumbrun acknowledged that Lancaster lacked convenient access to interstate highways. But, he said, the county has plenty of other qualities to attract corporate headquarters, from high-quality of life to a low cost of living to good education and health care.
“From what I know of the United States, Lancaster is a very attractive place to be,” Zumbrun said.
Tom Baldrige, president of the Lancaster Chamber of Commerce & Industry, agreed that the county was a good place to do business.
“Lancaster has more people within 200 miles of it than any other city in the United States,” Baldrige said. “So, the access to market is certainly of great benefit.”
The most recent threat to a local Fortune 500 headquarters came this summer, when Hershey Foods Corp. put itself up for sale under orders from its majority owner, the Hershey Trust Co.
The possibility of losing Hershey Foods inflamed people in the Derry Township, Dauphin County area, who fought to preserve the hometown chocolate company as an independent entity. The Hershey Trust eventually backed away from a sale.
Lockhart discussed the future of Armstrong Nov. 4 as he explained the company’s reorganization plan.
Under the plan, Armstrong will have new majority owners: a trust run for the benefit of people who sued the company over exposure to asbestos. The cancer-causing substance once was used in building products.
The trust will hold roughly 65.5 percent of the stock in a reorganized Armstrong and appoint new board members. Other creditors will own the remaining shares.
To raise cash for paying claims, the asbestos trust eventually could sell the company, Lockhart said.
“If someone made an offer for Armstrong like Wrigley made for Hershey, they just might sell,” Lockhart said. Chicago-based William Wrigley Jr. Co. was one of the companies angling to buy Hershey Foods this summer.
Unlike Hershey, Armstrong’s trust will not be a charitable trust and, therefore, would not fall under the jurisdiction of the state Attorney General’s Office. Attorney General Mike Fisher had fought efforts of the Hershey Trust to sell Hershey Foods.
“One could certainly anticipate that there would be a community reaction similar to that in Hershey should the ownership issue come into question as this process moves forward,” said Baldrige, of the Lancaster chamber. However, he acknowledged, “There’s not the same leverage here.”
At the moment, Baldrige said, Armstrong’s reorganization simply meant more of the “wait-and-see”
that has prevailed throughout the bankruptcy. “We’re not anywhere near the point of burying the dead,” Baldrige said. “We’re more at a point of watching a transition.”
He expected Armstrong to act in the best interests of the community, employees, stockholders and debtors.
“I don’t think this should be perceived as Armstrong looking for a quick out to the community,” Baldrige said.