Decision coming on Norfolk Southern HQ move to Atlanta

A two-horse race is entering the home stretch with a decision expected soon on whether to relocate Norfolk Southern Corp.'s headquarters to Atlanta.

Mayor Kenny Alexander of Norfolk, Va., told the Virginian-Pilot Oct. 2, “We are at a critical juncture,” and that “a deal has already been struck” and a decision is “going to be made and made soon.”

The railroad is already in the process of consolidating operating divisions and moving dispatching staff to Atlanta, where its operations team is based. It’s part of NS history, as predecessor Southern Railway had its operations center there.

But any final decision hinges on a controversial real estate deal in Atlanta. Norfolk Southern owns property in the downtown Gulch neighborhood, and the City Council could vote as soon as Oct. 15 on $1.75 billion in public financing toward an estimated $5 billion redevelopment plan. Georgia Gov. Nathan Deal has said that NS would relocate only after selling its property, and urged the Council to support the incentive package.

Bert Brantley, chief operating officer of the Georgia Department of Economic Development, said that NS is scouting Atlanta for a new headquarters. The sale of its Gulch property would help finance new headquarters in Midtown.

Norfolk Southern reportedly told members of the Council that it wanted to conclude the Gulch sale by the end of September, ahead of its third-quarter earnings report.

“Norfolk Southern is in the process of developing its next long-range plan,” the company said in a statement. “That effort is considering many courses of action, including the possibility of consolidating headquarters into a single location. Our long-range plan is complex and will take time to develop, and Norfolk Southern will publicize our plans and decisions when appropriate. Until then, our focus will be on the plan’s development.”

While any formal Virginia counteroffer awaits the Atlanta decision, late last week Alexander met with NS Chief Executive James Squires, offering city-owned property for the railroad and possible millions in state dollars for new job incentives. Squires also met Oct. 1 with Virginia’s Secretary of Commerce and Trade and head of the Virginia Economic Development Partnership. The city of Norfolk owns several properties near Norfolk Southern’s 22-story tower downtown that could be used to expand its headquarters, the mayor said.

The Atlanta project is strongly opposed by community advocates, who told the council at its Oct. 1 meeting that the plan is a giveaway of tax revenue needed for education and other public services.

The council is awaiting the results of an audit requested by Atlanta Mayor Keisha Lance Bottoms that has slowed the process but could still set up a vote on the public financing at the next meeting Oct. 15.

Unnamed sources close to Norfolk Southern say moving the headquarters to Atlanta is only a matter of time, the Virginian-Pilot reported. The company already has about 2,800 employees in the area and more than 4,700 in Georgia. It employs roughly 1,000 employees in Hampton Roads, about half at the downtown headquarters downtown, and a total 4,000 across Virginia.

Squires told analysts in July that the railroad was restructuring its divisional and regional leadership in an effort to streamline operations “and push our strategic plan out to field level,” specifically naming Atlanta.

“We are bringing our dispatchers into Atlanta,” Squires said. “By the end of this year, we’ll have everyone centralized, under pre-negotiated implementing agreement, by the way. They’re in Atlanta side by side with our network operations team, our locomotive control team, our service design team, and that’s an industry best practice that we are embracing. And that’s change for us.”