Taking Stock
Local Firm Has Ties With World Trade Center
By Mary Cashiola
When it happened, Hal Lewis was listening to his company’s internal open-mike system.
America will hear a lot of these stories in the coming weeks, months, maybe even years, but Lewis is a vice president for Salomon Smith Barney here in Memphis.
“This is an early business,” says Lewis. “Traders get here and get on the phone to clients before the market opens.”
At 7:30 a.m., everything seemed fine; it was just another day. Lewis was listening to regularly scheduled programming about the financial news of the day via the company’s Shout Down system.
Anyone in the company can pick up the phone and break into the transmission, and at around 7:45 a.m., that’s exactly what happened. The company’s traders, working from within the World Trade Center, used the open-mike system to tell everyone in the company not to call the trading floor and place orders.
“They said there’s a fire, don’t call the trading desk with orders, we don’t know if we’re going to be evacuated,” says Lewis.
As the situation went on, the traders got on the system again and said they were leaving. Lewis says one of the traders had been on the phone with an employee of Cantor Fitzgerald, located on the 101st through 105th floors of the tower, and people there were panicking because of the raging fire.
It seems some of the people in the building didn’t know exactly what was going on.
“No one inside knew the severity of the situation,” says Lewis. “They didn’t know a plane had hit it. That’s probably the last thing they would have thought of.”
The internal communication system shut down shortly after that. Since then, there has been no internal communication about personnel at all, says Lewis.
“Our sources of information are the same as everybody else’s now, television and the press,” he adds. “You should really talk to someone over at Morgan Stanley — they had the bulk of their offices in the World Trade Center.”
Of the 50,000 or so people who worked in the buildings, Morgan Stanley was the largest tenant, employing about 3,500 people and leasing about 25 floors. Local representatives from the company will not comment and have directed queries to a New York office. A representative from the company’s headquarters in midtown New York returned the Flyer‘s calls but would only say that the company had set up a toll-free number and was putting updates on their Web site.
She did indicate that she believed actual fatalities to be lower than previously implied by news organizations. The firm reported Wednesday that the “vast majority” of its employees got out safely.
The stock market is closed Wednesday and is expected to resume some time this week.
What happens when it re-opens, Lewis says, is anybody’s guess.
“If you turn the clock back 11 years to the Gulf War, the market had been very weak, and when we went to war that day, the market rallied,” says Lewis.
“But the economy has been pretty slack anyway. This could certainly push us into a recession.”
Storage USA, Jernigan Heading To Europe
by John Branston
Storage USA and its founder and chief executive, Dean Jernigan, are going to Europe, according to four knowledgeable and independent sources.
The sources, speaking on condition of anonymity, each said Storage USA plans to expand to Europe and that Jernigan will be moving to London for an extended time, possibly several months or a year or more.
Dean Jernigan and his wife Kristi are cofounders of the Memphis Redbirds and key players in the riverfront redevelopment and construction of a new arena for the NBA Memphis Grizzlies.
Kristi Jernigan referred questions about Storage USA to her husband. Dean Jernigan did not reply to a message left at his office.
The Flyer learned of the pending expansion prior to the terrorist attacks on New York and Washington, D.C. It isn’t clear whether that will change the plans. Nor is it known what effect recently published reports of a possible takeover of the company by its largest stockholder would have.
Dean Jernigan is a member of the Public Building Authority for the new arena and was a staunch supporter of the project from its inception as well as a spirited cheerleader for corporate ticket sales and sponsorships.
Kristi Jernigan is vice chairman of the Riverfront Development Corporation, the private agency created to take over riverfront parks and implement an ambitious plan to remake the downtown riverfront.
If they do leave Memphis for an extended time, it would leave the arena and downtown without three key boosters. Shelby County mayor Jim Rout previously announced he would not run for reelection when his term ends next year.
The Week In Politics
Gore’s future, Van’s plans, and Junior’s road show all drew some attention.
By Jackson Baker
In the wake of Tuesday’s horrors, it is not a time for taking much else seriously. Even the following events — some of which received national pickups after versions of them appeared on the Flyer Web site (www.memphisflyer.com) — pale in comparison. But they are part of the record:
• Lucia Gilliland and her husband, Memphis attorney Jim Gilliland, are among the closest friends that Al and Tipper Gore have.
Both Gillilands went to Washington after the first election of the Clinton-Gore ticket in 1992 and took jobs with the new administration — Lucia as an official adviser to the Gores in the White House and as a national director of the Women’s Leadership Forum of the Democratic National Committee, and Jim as chief legal counsel for the Department of Agriculture. Both were heavily involved in the Gore presidential campaign of 2000. Both continue to see the Gores on a friend-to-friend basis.
Lucia Gilliland, who has more than a casual interest in what comes next and more insight than most into what that could be, thinks the former vice president is virtually certain to seek the Democratic nomination for 2004. And when he does, actually even before he does in any formal sense, Gilliland is determined to take an active leadership role on the Tennessee end of things.
“It was here that he lost the election. Florida wouldn’t have mattered if he’d carried Tennessee,” said Gilliland during a weekend conversation. And she vowed, “We won’t fall short again.”
One of the problems with Gore’s campaign in Tennessee, Gilliland said, was that he seemed to be scheduled for quick in-and-out fund-raising trips (“Wham bam, thanks for the money”) but not much more. And she concurred with the criticisms of those who said Gore’s media advertising failed to be as Tennessee-specific as it could have been.
Moreover, said Gilliland, the best way for Al Gore to wage another presidential campaign is as himself — warts and all. “But not the beard!” she said, seemingly aghast at Gore’s newest experiment with personal transformation.
“It was a mistake” for Gore to submit to the various remodeling efforts that attracted so much negative attention during the last campaign period, Gilliland said. “He’d have come off better if he’d run as the real Al Gore.” On balance, she believes, Gore’s virtues — which include intelligence, knowledgeability, dedication, and good intentions — outshine his flaws, which include a tendency to go flat at inconvenient times and an awkwardness at some of the people skills required by politics.
Gore will never be as smooth as the man whom he served as vice president for eight years, former President Bill Clinton, says Lucia Gilliland. And yes, she agrees with various post-mortems of Gore’s near-miss which suggest that he might have gone over the top if he’d involved Clinton more actively in the campaign — specifically in Tennessee and Arkansas.
The thinking of Gore’s advisers seemed to be that too much closeness to Clinton would offend “the swing voter,” Gilliland said.
The issue in 2004 will be the record of the current president, George W. Bush. And if voters get a chance to choose between the two of them again, a Bush who is no longer an unknown quantity and a Gore who is content to be known as he really is, Lucia Gilliland opines that “it won’t even be close.”
• U.S. Rep. Van Hilleary (R-4th), the consensus favorite to become the Republican nominee for governor of Tennessee next year, continues to speak of the administration of the man he wants to succeed, Governor Don Sundquist, as a handicap to GOP efforts to hold on to the governor’s mansion.
In an interview two weeks ago when Hilleary was in town to address the East Shelby Republican Club’s Master Meal, the congressman and former Gulf War combat pilot spoke directly to the “divisive” nature of Sundquist’s backing of an income tax. On Saturday, addressing attendees of the Dutch Treat Luncheon at the Audubon Cafe, Hilleary was a bit more circumspect.
“Electability will be an issue for Republicans,” Hilleary said, “considering the way things have been done the last few years.”
He would not elaborate on the reference afterward, but everyone asked about the remark — event co-chairmen Ed McAteer and Charles Peete, for example — said it was clear he meant Sundquist would be a handicap to the Republican nominee.
The subject of electability loomed large for Hilleary. He seemed to be making a point of addressing fears that have been expressed in some circles that he, though far ahead of any conceivable Republican opponent in both fund-raising and political support, might not be competitive enough against former Nashville mayor Phil Bredesen, the likely Democratic nominee.
After invoking the specter of Sundquist and his espousal of an income tax. Saying, “I love to be a risk-taker, but I have no intention of [doing anything imprudent],” he then went on to enumerate reasons why he is confident of victory.
In essence, they amounted to a belief that seven of the state’s nine congressional districts — excepting only the 9th (inner-city Memphis) and the 5th (metropolitan Nashville) were either dyed-in-the-wool Republican or, on the basis of their recent track records, highly competitive for the G.O.P.
• A road-show version of the Washington production called “Campaign-Finance Reform” came to the University of Memphis’ Faulkner Lounge last Friday, and a good time was had by all, despite the absence, due to a prostate operation, of the drama’s main player, Senator John McCain.
The other familiar cable-news faces were there, however — Sen. Russ Feingold, the Senate co-sponsor with McCain of the major extant reform bill, McCain-Feingold; Reps. Chris Shays (R-Ct.) and Martin Meehan (D-Mass.), sponsors of the companion House bill — along with two not-so-familiar ones; Rep. John Lewis (D-Ga.), a legendary veteran of the civil rights movement; Rep. Marion Berry (D-Ark.); and Scott Harshbarger, head of the citizens’-rights lobby Common Cause. And, by no means an understudy in this imposing group, there was 9th District U.S. Rep. Harold Ford Jr.
At a brief press conference before the event, Ford was cited by his fellow panelists as a major force in the effort to pass McCain-Feingold. He has been the subject of several articles noting his missionary work for the bill with fellow African Americans in Congress.
“When we started a few weeks ago, there were only five African-American members willing to say they were for the bill. By the time we get to a vote, that number should be close to 30,” said Ford.
• Circuit Court Clerk Jimmy Moore reluctantly decided this past weekend not to seek either the office of Shelby County mayor or that of sheriff.
Moore’s friend, developer Jackie Welch, had overseen polling into both possibilities. “The race could be won,” Moore said about the sheriff’s race, always the stronger possibility of the two ventures now eliminated.
Moore will now pursue a reelection race to the clerk’s job, seeking the Republican nomination as before.
Meanwhile, Mark Lutrell, director of the Shelby County Division of Corrections, is actively considering a race for sheriff, presumably as a Republican.
city beat
The Aftermath
What’s Ahead For Memphis’ Economy?
By John Branston
What happens to Memphis when America is not as safe, not as rich, not as adventurous, and not as willing to fly?
Because of its dependence on FedEx, Northwest/KLM Airlines, and downtown tourism, the Memphis economy could be hit hard in the aftermath of Tuesday’s terrorist attacks on the United States.
The temporary grounding of all airlines and the strange stillness at Memphis International Airport are the most sobering reminders that some 30,000 Memphis-area residents work for FedEx or Northwest.
FedEx has made a big move into ground transportation, but airplanes are still the backbone of its express cargo operation. And when your nickname is America’s Distribution Center, there isn’t a warehouse or trucking company within 100 miles of Memphis that doesn’t have some link to FedEx. Will the ripple effect be a ripple or a wave?
With four banks of flights every day, Northwest/KLM moves a million passengers through Memphis each year. How many of them will decide to postpone or cancel travel plans out of safety or financial considerations? When airlines are already struggling to fill seats and hold prices, how would, say, a 10 percent reduction in airline passenger counts impact Memphis and Northwest/KLM? What about 20 percent?
Commentators are already talking about the “security tax” that will be imposed, literally and figuratively, on all Americans. Airport delays will be longer and more numerous. There will be more security checkpoints, not just at airports but at government offices and tourist attractions. How many vacation travelers will decide to stay put or travel by car, especially during the holiday seasons?
The Memphis Convention and Visitors Bureau is banking on airline passengers and conventions to fill thousands of downtown hotel rooms, banquet rooms, meeting rooms, and exhibition halls. The new Memphis Cook Convention Center is scheduled to open next year. How many companies, trade groups, and associations will decide that they can get by with small regional meetings or teleconferences instead of $275-a-night hotel rooms and rental cars loaded with surcharges?
And what of the $250 million NBA arena? Stripped of property-tax support, it is to be financed by a hastily cobbled mix that relies heavily on user fees, hotel taxes, rental-car taxes, state taxes, and on-site sales-tax rebates. Isn’t every single one of those sources likely to produce less money than projected if, as experts say is almost certain, there is a national and global recession and a serious slump at two of the city’s biggest employers?
And what about fan support for the Memphis Grizzlies and the University of Memphis? Certainly Americans will cheer for sports teams once again. The cancellation of games this week is only temporary. The crowds will return. Talk will turn away from cataclysms to quarterbacks and point guards. But is the NBA success threshold of 12,000 season tickets and 2,000 club seats and 45 luxury suites — year after year — still realistic? And if it isn’t, would it be prudent for Memphis and Shelby County to reconsider spending a quarter of a billion dollars to replace a 10-year-old Pyramid?
When the stock market reopens, what happens if investors are suddenly worth 15 or 20 or 25 percent less than they were a week ago? The easiest thing for an individual to cut is discretionary spending, travel, and entertainment. For a business, add advertising and sponsorships. That will come right off the bottom line for the Grizzlies and other teams. How many of those 7,000 season-ticket commitments (if that is the true number) and long-term ticket guarantees stretching out 15 years will be worthless at the end of the year?
If there is reason for optimism, it could be the International Paper effect — that is, corporations moving headquarters or significant operations out of cities like New York and Los Angeles into centrally located “backwaters” like Memphis where the stress and cost of living are lower, as IP did.
If you worked in a Manhattan skyscraper, what would you do?
