Deal safeguards most jobs, charitable activities to go on

By Charles Stein, Globe Staff, 9/29/2003

The question comes up every time a major local company is acquired by a corporation from out of town: Is it going to hurt Boston?

In the case of the Hancock deal, the answer looks to be no -- at least for now. In the merger negotiations, John Hancock Financial Services Inc. won commitments from Manulife Financial Corp. that provide protection for the charitable contributions Hancock makes as well as most of the jobs it has here.

Executives yesterday said Hancock would remain a "major employer" in Massachusetts, where it has 3,800 people, and Manulife 600 more. Hancock also extended for four more years a deal it had made with state regulators that would guarantee at least half of Hancock's work force would be based in Massachusetts.

On the community side, Hancock will maintain its annual $5 million to $6 million in local charitable giving for the next four years and will continue its sponsorship of the Boston Marathon through 2018. Hancock also intends to keep up its extensive volunteer support of the Boston public schools. Manulife pledged to maintain its own community giving in Massachusetts, which amounts to about $1 million a year.

"It sounds as if Hancock will still be a visible and active player in town," said Paul Guzzi, president of the Greater Boston Chamber of Commerce.

When a big company is sold, the fears go beyond easily measurable dollars and cents. Community leaders worry that executives who take orders from bosses in some other city or country won't have the same commitment to Boston as executives in firms headquartered here.

"As companies become more national and global you always have to wonder how much support they are going to give local matters," said Nicholas Perna, an economist based in Ridgefield, Conn.

Perna cites Hartford as an example of a city that has been hurt by the merger process. Once home to a number of big locally based banks and insurance companies, Hartford today is mainly a branch-office town with few major companies that are locally run.

"The loss of an identifiable power group of executives has hurt the city's fortunes," Perna said.

Boston has fared better, economists said. It has retained its reputation as a business and financial center, even as a long list of local companies has been acquired. In one case, an out-of-town acquirer, Fleet Financial Group, moved to Boston from Providence after it bought Shawmut National Corp. in 1995. Fleet wanted its headquarters in a bigger city.

"We've done very well in Boston," said Mayor Thomas M. Menino yesterday. Menino said Boston has continued to attract personnel and money from the corporate world, even as ownership of local companies has shifted elsewhere.

Over the past two decades, Boston area companies in virtually every important industry have been snapped up. The targets included banks (Bank of Boston, BayBanks, Shawmut), insurance companies (New England Life), high-technology firms (Digital Equipment, Wang Laboratories, Lotus Development), utilities (New England Electric), media (The Boston Globe, WCVB), and retailers (Jordan Marsh, Filene's, Stop & Shop).

In its annual report on local companies, the Globe 100, The Boston Globe recently captured just how radically the cast of characters has changed in the business world. Of the 25 top publicly traded companies in Massachusetts in 1989, the first time the Globe 100 was published, only seven were still independent Massachusetts companies in 2003. The rest either failed or were acquired.

Some of the companies that were bought have shrunk considerably. Digital Equipment once employed 30,000 people in Massachusetts. Today, after a sale to Compaq, which in turn was bought by Hewlett-Packard, Digital's presence in the state is minimal. New England Life had 2,200 employees in Boston when it was acquired by Metropolitan Life in 1996. Recently the company said it has 1,067 people in Boston.

Other acquired companies have changed ownership, but otherwise operate the same way they always have. New England Electric, bought by Britain's National Grid, and Stop & Shop, now part of Ahold, a Dutch firm, from the outside at least have changed little under new owners.

Charles Stein can be reached at stein@globe.com.