FRED SMITH ON POLITICS, PYRAMID, AND MEMPHIS
America’s political journalists and historians have found a gold mine for information about recent presidential candidates.
It’s FedEx founder and chief executive Frederick W. Smith. In journalism lingo, Smith is a three-for-one source for stories about George W. Bush and John Kerry Ñ a Yale contemporary, a Vietnam veteran, and a CEO whose company owns the naming rights to the home of the Washington Redskins.
“I’ve given a lot of interviews about both Bush and Kerry, including to Douglas Brinkley for his book Tour of Duty, and I finally just quit,” said Smith, back in his Memphis office last week after the dedication of the World War II Memorial, for which he and former Senator Bob Dole were the main fund-raisers. “I couldn’t afford the time. I’m kind of like the Forrest Gump of American politics.”
As a Marine, Smith served two tours in Vietnam in the 1960s. In addition to his connections to Bush, Kerry, and Dole (the 1996 Republican presidential nominee), he is a friend of fellow Tennessean Al Gore, was a fund-raiser for Bush’s father, and was linked by geography if little else to Arkansas neighbor Bill Clinton. Throw in up-and-comer Harold Ford Jr. of Memphis, and you have the past, present, and possibly the future of American presidential politics. Smith, of course, is no dim-bulb Forrest Gump. A better comparison might be to his friend and fellow Memphian Shelby Foote. The author of the three-volume series The Civil War got a surge of publicity following the Ken Burns 1990 PBS documentary on the Civil War in which his stories, insights, and Southern accent stole the show.
“I had a nice talk with John Kerry on Saturday and a brief one with the president,” said Smith, who introduced Dole at the dedication ceremony. “George Bush and I were in the same fraternity. He was class of 1968 and I was class of 1966. I knew John Kerry from the time he was a sophomore, and we were in the same senior club. But we were in different parts of Vietnam, about as far apart as you can get, and I’m not sure if our tours overlapped.
“The memorial is tremendous,” Smith said. “The veterans just loved it. I had a number of family members in World War II, and I just regret none of them are here to see it.”
Although he has helped raise money in Memphis for both Bush and Bush Sr., Smith says he is a political independent. It’s fitting that the CEO of the state’s second-largest corporate employer (to Wal-Mart) would take the middle road in Tennessee politics. As Gore knows better than any presidential candidate, Memphis and Tennessee are two different political entities. Tennessee went for Bush in 2000, although Clinton won it in 1996, thanks to huge margins in inner-city Memphis. But East Memphis, where Smith’s office is located, and suburban Shelby County, where the company has relocated thousands of employees in the last 10 years, are solidly Republican.
“I have felt for a long time that the pendulum in U.S. politics has swung back and forth way too far Ñ from the Roosevelt era of trying to be way too active to the sort of somnolent Fifties to the Great Society and the counter-reaction in the Reagan years,” Smith said. “I don’t think the country has found the balance necessary to go forward. The two political parties have probably been a good system for the United States, but I have the luxury of being an independent.”
On a morning when the local news of the day was the possible closing of The Pyramid, which he helped build, Smith had a generally positive assessment.
“The big problem now with The Pyramid is that the remaining debt service should have been folded in with the debt service on the FedExForum, like our CFO Alan Graf recommended,” said Smith, who was chairman of the Public Building Authority in 1987 and 1988. “Given where interest rates went, you wouldn’t even be able to see it. Then it would simply be amortized out and provide a low-cost venue for those multi-day attractions that can’t be put in the FedExForum. I don’t think The Pyramid is a bad thing, except for the fact that there are now three facilities, counting the Mid-South Coliseum, instead of two.”
He called the NBA “the biggest thing that’s happened around here in a long time. I think it has a real quality of life coefficient to the corporate community.” Along with changes within FedEx, it has made it easier to recruit people to Memphis.
“Recruiting people to Memphis was harder eight or 10 years ago when the dot-com bubble was underway and people had visions of making fortunes without much effort,” he said. “We addressed that by building the FedEx Technology Center in Collierville and our new world headquarters. With the opening of Bill Morris Parkway, it is easy to get from there to downtown. People can live where they want to live. There have been some new private schools built, which is very important. The new St. George’s, the new Briarcrest, they are fabulous schools out there. People love working there. The quality of work life is much improved.”
The FedEx workforce in Memphis is more international and cosmopolitan than it was five or 10 years ago. FedEx invested in tech centers at Christian Brothers University and the University of Memphis, where the vast majority of graduate degrees in math and science now go to either foreigners or first-generation immigrants. Last week, Governor Phil Bredesen visited the FedEx Institute of Technology, while graduate students doing research on artificial intelligence gave tours of state-of-the-art facilities.
“All kinds of major companies including AutoZone, IBM, Hewlett-Packard, and Cisco have made major contributions to it,” said Smith. “A high school graduate in Memphis could definitely go to either of those schools and enter a technical career at FedEx or another company. That wasn’t the case 10 years ago, but it is today.”
FedEx employment now totals around 32,000 people in the greater Memphis area, adjusted for the offer of early retirement or voluntary severance that was accepted by more than 3,000 employees last year.
“I don’t think employment in Memphis is going to decline. And as the company gets bigger, it will continue to drift up,” Smith said. “The buyout offer hit its goals. You know, people know how to reach me through e-mail and so forth, and with the exception of a tiny number of people who changed their mind, I never heard one complaint, not one. It probably means we overpaid. That’s fine. We tried to be generous and it’s going to result in a cost savings of $235 million a year. And people are happy with it and it created a lot of opportunities for younger, more aggressive people to move up. Now growth has resumed in Express, and International, in particular, is really going up.”
With its acquisitions of Caliber and Kinko’s, FedEx has annual revenues of about $25 billion. Smith said it was easier to blend the corporate cultures of those two companies into FedEx than it was to acquire air freight competitor Flying Tigers in 1989.
“In the case of Caliber and Kinko’s, we felt comfortable because the cultures were already similar to ours Ñ very performance-oriented and employee- and customer-centric. It would be foolish to say we didn’t have to manage through some cultural issues, but we were pretty sure going in that we could do it. If we weren’t, we simply wouldn’t do a corporate development activity.”
He believes the biggest challenge facing Memphis is getting its fiscal house in order.
“The level of debt is a very serious problem,” he said. “We have spent ourselves into a hole. Whenever you pour money into a nonproductive activity, whether you’re talking about a corporation or a city with its educational system, you have a serious problem. The first thing they probably need to do is close some schools and stop building new ones where they don’t have enough kids. If they do that, then I’m not pessimistic about Memphis. I think Memphis has a lot of attractions.”
