I love the Fortune 500 list. I particularly like the way Fortune reranks its list, such as sorting out the companies that grew the fastest and the ones that proved to be the best investment.
But when I got this year’s Fortune 500 issue last week, it occurred to me what I don’t like about it. Fortune fails to group the companies by metropolitan area. Granted, it does sort them by strict city limits, but that seems archaic since so many corporate headquarters today are in suburbs.
It’s crucial for a metropolitan area to have big corporate headquarters. Major companies provide a base of employment (the effects of this recession notwithstanding) and they tend to underwrite the arts, donate to local civic causes and create foundations. Beyond that, the number of a city’s Fortune 500 companies is kind of a report card. It tells you whether the metro area is attracting and growing big companies or is repelling them.
Since Fortune does not group the Fortune 500 companies by metro area, I figured I’d try. I picked 15 cities and added in the headquarters in their suburbs. Here goes:
Los Angeles County has 14 Fortune 500 headquarters; if you throw in Amgen Inc. from Ventura County, that makes 15. Not bad. Of course, it doesn’t compare with the 60 that are in and around New York. But we knew that; it’s probably unfair to compare New York to any city.
What’s disconcerting is that Los Angeles doesn’t compare well with cities it should beat, or at least compete with. The Chicago area has 28 Fortune 500 headquarters. That means a metro area with a slightly smaller population than L.A. County has twice as many Fortune 500 headquarters. Other cities with more than L.A.: Minneapolis-St. Paul and Dallas-Fort Worth have 18 each. Gee, even bedraggled Detroit has 16.
Does L.A. compare favorably with anyone? Yes. Las Vegas despite all the news about its economic development has a mere two Fortune 500 companies. Phoenix has only five. Maybe lots of businesses are moving to Nevada and Arizona, but apparently not big ones.
Am I being unfair by failing to include Orange County with Los Angeles? OK, let’s throw it in, along with Ventura County and the Inland Empire. By my count, that boosts metro L.A.’s Fortune 500 count to 20.
That’s better, but it’s still not as good as Houston, which has 27. By the way, metro Houston has about one-third the population of L.A.-Orange County-San Bernardino. Ugh.
That brings up another point: Cities are different sizes. To come up with a number that adjusts for population, I got the latest U.S. Census estimates of metro population. I made a simple residents-per-headquarters calculation for each metro area I looked at.
According to my calculator, Las Vegas was the worst. For every 933,000 residents there, Sin City had only one Fortune 500 headquarters. Phoenix also came in with a high number: 856,000 residents per headquarters.
Others fared better. Here are some cities, followed by the residents per Fortune 500 company (remember, the lower the number, the better): Philadelphia, 487,000; Seattle, 418,000; New York, 317,000; and Detroit, 277,000.
Dallas-Fort Worth; Denver; Milwaukee; Charlotte, N.C.; and Cleveland were all in the mid- to low 200,000s. I found two cities below the 200,000 level: Houston and Minneapolis-St. Paul.
How did Los Angeles fare? Well, the calculation using the expanded L.A.-Orange County-San Bernardino metro area makes L.A.’s number worse. So let’s give L.A. a break by using the L.A. County number. That number: 704,000 residents for every Fortune 500 headquarters. Yes, Detroit whips us good.
If the Fortune 500 list is a grade card, someone needs to stay after class.
Charles Crumpley is editor of the Business Journal. He can be reached at
[email protected].
