Charlotte as a Globalizing City: A Brief Overview of Charlotte in Global City Network

Charlotte as a Globalizing City: A Brief Overview of Charlotte in Global City Network

by: Yudo Anggoro, University of North Carolina at Charlotte

 Introduction

Globalization is an inevitable process in today’s economy. Globalization affects every single aspect of human’s life; like in economy, culture, and politics. Globalization also brings significant effect on the status of several cities in the world. Some cities are considered as global cities due to their domination and contribution to the world’s economy. Those global cities may dominate the world’s economy due to their advantages in attracting investment, accumulating capital, and also being the center of cultural activities.

This writing attempts to explain the position of the city of Charlotte in North Carolina in the global economy. This writing seeks to answer the question, to what extent can Charlotte be considered a global city? Charlotte has undergone significant transformation to be a more influential city in global context. Expanding connectivity with global economic markets, a rapidly growing foreign-born and increasingly transnational population, broadening social and cultural diversity, fixed capital investment in the form of corporate headquarters, and major public transit and infrastructure development are the features of globalization that can be easily found in Charlotte (Graves and Smith, 2010).

This writing is looking to answer the question by mapping the position of Charlotte in the world-city network. Analyzing network is crucial because what happens between the global cities (the flow of information, money, people, or ideas) also matters in determining global city status. Analyzing network is also vital in understanding the dynamic relation of cities in the global context.

Brief Literature Review

Early studies on world cities used attributes such as politics, trade, communication, culture, technology, and higher education to define world cities (Hall, 1966). Other early study used the distribution of headquarters to rank cities (Hymer, 1972) as a world cities indicator. Similarly, Friedmann (1986) included the concentration of finance, multinational corporation headquarters, business services, manufacturing activity, transportation, and population as attributes of world cities.

Friedmann (1986) and Knox (1997) also identify global cities from their ability to accumulate capital and spatial concentration of financial and producer services industries in the world economy. Another view of world cities from The “Los Angeles School” treated city as a “privileged site” for reflexivity, because of its embedded knowledge and learning structures.

Several cities in the world are considered as global cities. For example, Sassen (1990) indicates that New York City, London, and Tokyo are considered as global cities due to the growing financial service industries in those cities. Meanwhile, by tracing back the history of development of each city, Abu-Lughod considers that New York, Chicago, and Los Angeles have established themselves as global cities in the world.

World-City Network

Unlike the mainstream view of world cities that characterize world cities from the number of “command centers” to control and articulate the ‘new international division of labor’ being created by multinational corporations (Friedmann, 1986; Sassen, 1990), the world-city network view considers it is important to perceive world cities from their relation in the network. This view argues that not many literatures on world cities consider the importance of relation between cities.

As an example, Beaverstock et al. (2002) argue that world cities should be conceptualized as a process located in a networked “space of flows” rather than as specific places. World cities are important because of what flows through them (in terms of information, money, ideas, people, and so on) rather than what they statically contain (the nodes). Another scholar, Castellls (1996) initiated to conceptualize world cities as processes by which centers of production and consumption of advanced services are connected in a global network.

In order to study the world-city network, Beaverstock et al. (2002) use the global office location of advanced producer-service firms to identify world-city network. This is due to the fact that firms that provide business services on a global scale have to decide on the distribution of their practitioners and professionals across world cities. Information can be obtained by investigating a variety of resources, such as company web sites, internal directories, handbook for customers, and trade publications.

The study conducted by Beaverstock e.al. (2002) collected data from 74 companies in 263 cities. An initial analysis of this data identified 143 major office centers in these cities, and 55 of them were designated world cities on the basis of the number, size, and importance of their offices. The 55 world cities consist of 10 Alpha cities, 10 Beta cities, and 35 Gamma cities. Only Alpha cities-Chicago, Frankfurt, Hong Kong, London, Los Angeles, Milan, New York, Paris, Singapore, and Tokyo- are used in this study to illustrate how office geographies can define intercity relations.

However, some scholars criticize the world-city network view to define global cities. For example, Smith and Doel (2011) argue that the concept of global cities as networks is fragile, ongoing achievements, not only because they hold together, but because they are blind to what they cannot take into account: multiplicity and event as products of subtraction. They also criticize the concept of world-city network (Taylor, 2001) that focuses on the strategic control capacity of the worldwide network of cities as a functional whole.

According to Smith and Doel (2011), the world-city network theory contains a fundamental construct-validity problem at the heart of the global city/world city network. They argue that the term strategic control cannot be squared with corporate service centers, inter-city/intra-firm office networks, or any such envisioning of the world economy as a totality that is structured from a distance. Regarding the argument from Sassen (1990) on the presence corporate headquarters as an indication of global ideas, Smith and Doel (2011) challenge this perspective by arguing that what more important is how these centers and headquarters actually function to accomplish strategic control of economic activities on a global scale.

Charlotte in World City Network

A major indicator of a city’s economic strength and stability is the presence of multinational company offices in that city (Friedmann, 1986). In this writing, analysis of Charlotte in global-city network is conducted by analyzing the presence of Fortune 100 company offices in the city. The Fortune 100 (actually Fortune 500 is more common in comparing multinational companies, but due to time limitation, this writing only focuses on Fortune 100) list is compiled each year by Fortune magazine by ranking the annual revenues of large national and multinational corporations in the world. Revenue does not have a direct relationship with profits or market value, but the list is a quantitative symbol of the scope, power and size of a particular company.

The companies on the Fortune 500 list represent a wide array of industries. They are also structurally diverse, ranging from partnerships and alliances to multiple business entities. It is no surprise that metro areas find it attractive to recruit these companies’ headquarters due to the potential capital and labor investment and the extent of secondary investment (Charlotte Chamber of Commerce, 2012). These headquarters also give global recognition to the city as a major center of business activity and contribute greatly to corporate giving for arts, education and cultural amenities in an area.

Six of the 500 companies are headquartered in Charlotte-Mecklenburg County. This ranks Charlotte ninth nationally in number of Fortune 500 companies headquartered within the county (Charlotte Chamber of Commerce, 2012). These headquarters represent more than $188.4 billion in revenue for 2010. Lowe’s, which is headquartered in nearby Mooresville, increases the Charlotte area headquarters’ revenue to $237.2 billion. More importantly, 273 of the Fortune 500 companies have made a commitment to the city by placing one or more of their facilities within the county. The list of Fortune 500 companies that have headquarters in Charlotte-Mecklenburg County is presented in Table 1. From Table 1, it can be concluded that the industry type of Fortune 500 companies that have headquarters in Charlotte varies, from banking, retail, energy, and automotive. If we analyze from industry rank, the industries that present in Charlotte are considered as top industries. Five out of six Fortune 500 companies that headquartered in Charlotte operate in top five industry type (Table 2).

Table 1. Fortune 500 Companies Headquarterd in Charlotte-Mecklenburg County

Rank	Company
9	Bank of America
50	Lowe’s
157	Nucor
173	Duke Energy
302	Family Dollar
339	Sonic Automotive
460	SPX
498	Ruddick

Table 2. Industry Rank

Industry Type	Company	Industry Rank
Commercial Banks	Bank of America	1
Metals	Nucor	3
Specialty Retail	Lowe’s	4
Utilities	Duke Energy	5
Automotive Retailing	Sonic Automotive	5
Industry Machinery	SPX	5
Food and Drug Stores	Ruddick	11

The distribution of global cities that have headquarters of Fortune 500 companies can be seen from Figure 1. From Figure 1, New York City has the most number of Fortune 500 headquarters, which confirms the domination of New York City position in global economy. London has the most number of Fortune 500 headquarters outside the US. Interestingly, Charlotte has more Fortune 500 headquarters (6) compare to those in Los Angeles (5), the established global city. This may reflect good atmosphere in doing business in Charlotte, and business professionals may consider Charlotte as a good place to have business in global environment.

 Figure 1. Distribution of Fortune 500 Headquarters in Graph

Mapping Charlotte in world-city network should be started by analyzing the presence of multinational company offices, in this case is Fortune 100 offices, in Charlotte and other global cities as comparisons. New York City, Los Angeles, Chicago, and London are chosen as global cities to compare with Charlotte. We should note that in this analysis, we analyze offices of Fortune 100 companies, not the headquarters. Offices may also represent branches, stores, service centers, or marketing representatives. For example, if Wal-Mart has stores in Charlotte, we consider that Wal-Mart presents in Charlotte. This is important because we analyze the flow in the network, and flow may not only be represented by headquarters. The data comes from Fortune 100 list in 2011, and analysis is conducted by looking at the website of each company.

After compiling the data of Fortune 100 offices in global cities, the next step is constructing matrix that shows the shared presence of Fortune 100 offices in two cities. For example, if Wal-Mart has office in both New York City and Charlotte, we may conclude that Wal-Mart has shared presence in both cities. The matrix of shared presence Fortune 100 offices is presented in Table 3.

Table 3. Shared Presence Matrices in Global Cities

	New York City	Los Angeles	Chicago	London	Charlotte
New York City
Los Angeles	96
Chicago	94	94
London	88	87	86
Charlotte	75	75	75	69

From Table 3, New York City and Los Angeles have the most shared presences of Fortune  100 offices, indicating that both cities have the strongest tie in world-city network. This reflects the fact that the business flow in both cities (can be in terms of people, ideas, information, or money) is very active, indicating that both cities are global city. Another city that has strong tie is Chicago. This finding also confirms the domination of New York City, Los Angeles, and Chicago as global city, not only in the US but also, in the world.

London has medium ties; the shared presences of Fortune 100 companies in London are not as high as those in New York City, Los Angeles, and Chicago. This can be understood since most of Fortune 100 companies are US companies, and the matrices only consist of five cities in the world, while the other four cities are US cities. If we expand the matrices by adding other global cities outside the US, perhaps it can bring different results.

Meanwhile, Charlotte has weak ties of shared presences of Fortune 100 offices, compared to other four cities in the matrices. On average, the shared presences of Fortune 100 offices in Charlotte and other US cities is 75%, while the shared presence with London is only 69%, that indicates the weakest tie in the matrices. While we may argue that this number is quite poor compared to other cities, we may also say that this number is quite promising for Charlotte as a globalizing city, since the other cities has established themselves as global cities some decades ago.

If we transform the matrix into a city-network, the map of world-city network can be seen in Figure 2. New York City, Los Angeles, and Chicago are the three dominant global cities in the world, while London is the medium global city, and Charlotte is the globalizing city.

 

Figure 2. World-City Network

Flow of People

Another important element in the world-city network is the flow of people, and international airport is the best place to analyze the flow of people who travel globally. Charlotte-Douglas International Airport (CLT) has been receiving growing global attention lately. For example, CLT received the prestigious Eagle Award in 2010 from the International Air Transport Association (IATA) for “Best Airport” (Charlotte-Douglas International Airport, 2012). Eagle Award is considered as the most distinguished of awards in the aviation industry. Charlotte Douglas was also recognized for its quality service and economical value to airline customers.

Passenger Traffic

In 2011, CLT broke passenger traffic record by having more than 39.04 million travelers who visited the airport in that year. It’s a 2 percent increase from 2010, which saw 38.25 million passengers. Airport officials attribute much of the gain to added flights by airlines who serve CLT. US Airways, which operates its largest hub at Charlotte Douglas, began seasonal service to Madrid, Spain and Dublin, Ireland in May 2011. The airline now flies to 31 international destinations from CLT – six cities in Europe and 25 in Latin America and the Caribbean. US Airways also added a fourth daily flight to Gulfport-Biloxi, Mississippi in October 2011. While InselAir made its debut at CLT in June 2011, beginning service to Curacao International Airport. Another significant increase for CLT is in terms of international passenger traffic that rose by 6 percent in 2011 (Charlotte-Douglas International Airport, 2012).

As the second largest hub on the east coast, CLT offered nonstop service to 138 destinations and averaged 673 daily departures in 2011. The impact created a jump in airport operations. Last year, CLT oversaw 539,842 landings and departures, a 2 percent increase from 2010. The position of CLT in airport ranking is also promising. CLT placed 11th nationwide and 25th worldwide in passenger numbers, which remained consistent with 2010 rankings.

This writing analyzes the annual passenger traffic in seven international airports in the world, which are New York-John F Kennedy International Airport (JFK), Los Angeles International Airport (LAX), Chicago-O’Hare International Airport (ORD), London-Heathrow International Airport (LHR), Tokyo-Haneda International Airport (HND), Paris-Charles de Gaulle International Airport (CDG), and CLT. Annual airport passenger traffic reflects the numbers of passenger who travel in an airport in one year period. The data are gathered from Airport Council International database from 2000 to 2011. The compilation of the data can be seen from Figure 3 below.

 

Figure 3. Annual Passenger Traffic, 2000-2011

From Figure 3, we can see that CLT has the lowest annual passenger traffic from 2000-2011, compared to other international airports in global cities. But interestingly, the annual passenger traffic at CLT shows an increasing trend from year to year, especially after the financial crisis in 2007 or 2008. Meanwhile some international airports indicate decreasing trends in passenger traffic, such as at ORD, LAX, and HND. These decreasing trends also occurred after the financial crisis in 2007/2008.

These various trends lead to a question how the trends would be look like if we make projections of the trends to some years in the future, assuming that everything is constant, ceteris paribus. Therefore, if we make projection of the annual passenger traffic to ten years in the future (2022), the forecast can be seen in Figure 4.

Figure 4. 10 Year Projection of Annual Passenger Traffic

In ten years from now (2022), the annual passenger traffics at LAX and ORD keep decreasing, while CLT interestingly seems to overtake the traffic at LAX. In 2022, if everything goes constant, ceteris paribus, CDG will have the biggest annual passenger traffic, compared to other international airports. LHR follows in the second position, followed by HND. This is interesting, because international airports outside US show increasing trend in annual passenger traffics, while US international airports, on average, show decreasing patterns. These trends may reflect the growing economy of countries outside US. Looking at the increasing trend in CLT, it would be interesting if we extrapolate the data to further projection of time. The projection of annual passenger traffic to 50 years from now (2062) can be seen in Figure 5 below.

Figure 5. 50 Year Projection of Annual Passenger Traffic

In 50 years from now, assuming that everything is constant, JFK will be the busiest international airports, compared to other airports in the model. JFK will be followed by CDG, and interestingly, CLT. Meanwhile, LAX and ORD are still showing decreasing trends in annual passenger traffics. This projection reflects the opportunity for CLT, and for city of Charlotte in general, to gain a respectable position in the world-city network. This trend indicates the right path for Charlotte to be a global city in the world, on the same level as other global cities that are already established before.

Airport Movement

Another measurement that is useful to analyze the world-city network is by analyzing the annual airport movement at international airports. Annual airport movement measures the number of airplanes to take-off or to land in an airport in one year period. In terms of airport movement, CLT has received respectable position compared to other international airports in the world.

CLT is the sixth busiest airport in the world, according to 2011 preliminary rankings recently released by Airports Council International (ACI). The latest figures move CLT up from 2010 numbers, which placed the Airport seventh worldwide and nationwide in aircraft movements. Last year, CLT oversaw 539,842 landings and departures, a two percent increase from 2010. The jump occurred in spite of a 70-day closure (August 15-October 23, 2011) of the center runway for concrete repaving (Charlotte-Douglas International Airport, 2012).

This writing analyzes the trend in airport movement in five international airports in the world; which are: LAX, ORD, LHR, CDG, and CLT. The data comes from the Airport Council International from 2000 to 2010. The compiled data can be seen from Figure 6.

 

Figure 6. Annual Airport Movement, 2000-2010

In Figure 6, we may see that in terms of annual airport movement, CLT has shown positive trend since 2004, while other international airports such as ORD, LAX, and LHR have decreasing values. Looking at this positive trend at CLT, it would be interesting to see the projection of annual airport movement to several years in the future, assuming that everything goes constant. The projection of annual airport movement in 10 years (until 2022) is shown in Figure 7.

 

Figure 7. 10 Years of ProjectionAnnual Airport Movement

In Figure 7, we can see that CLT ranks second in term of airport movement compared to other, assuming that everything is constant. We can see that CLT is the only international airport that shows positive trend in term of airport movement. If we draw the extrapolation to more years in the future, say in 40 years (2052), the graph is shown in Figure 8.

Figure 8. 40 Years of ProjectionAnnual Airport Movement

From Figure 8, if we assume that everything goes constant, CLT will be the busiest international airport in term of airport movement, compared to other international airports in the model, in 30-40 years from now. Meanwhile, other international airports in the US, LAX and ORD have decreasing trends, while two international airports in Europe, LHR and CDG, have slightly level trend. This reflects the situation that more airplanes will travel to CLT in 30-40 years from now, and this indicates that the economic situation in Charlotte is promising.

An interesting thought comes in when we analyze the data of airport movement and passenger traffic at CLT. In term of airport movement, CLT ranks 6^th in the world, but in term of passenger traffic, CLT ranks 25^th in the world, both data are in 2011. What does this data tell us? This data may reflect that the number of airplanes at CLT is high, while the number of passengers is medium. When we have this situation, we may conclude that those passengers are being served by small or medium planes, instead of big planes. This may also tell us that at CLT, domestic flights (mostly using small medium planes) are the dominant flights, compared to the international flights (mostly using big planes). If Charlotte wants to establish its position on global city stage, more international flights at CLT should be considered.

Air Cargo

Another measurement that might be useful in analyzing world-city network is by looking at the air cargo data in international airports. Globalization the movement of commodities across boundaries of nations, and this may include the air cargo movement. Data for this measurement are gathered from Federal Aviation Administration (FAA) database from 2000-2010. Unfortunately, the FAA only provides database from airports in the US, so that in this measurement, only JFK, LAX, ORD, and CLT that being included in the model. The air cargo data from 2000-2010 is presented in Figure 9, while Figure 10 presents the projection of air cargo in the next five years. The measurement unit of the data is in lbs.

Figure 9. Air Cargo, 2000-2010

Figure 10. 5 Years Projection of Air Cargo

Based on Figure 9 and 10, interestingly, air cargo at CLT is very low compared to it is at other airports. The air cargo data at CLT also shows decreasing trend, so that if we continue the projection after 2017, and everything is constant, the air cargo at CLT may be negative. This may reflect that the number of flow of commodities at CLT is far below the number of passenger traffic and airport movement. We may conclude that more people travel from/to Charlotte than commodities that shipped from/to Charlotte. Another interesting thought is that the number of manufacturing industry in Charlotte (that is most likely using air cargo) is decreasing, while the number of service industry in Charlotte (most likely using human capital) is increasing. From this figure we may also conclude that Charlotte is growing toward a service city.

Conclusions

Several conclusions can be drawn based on the findings in this writing:

1. Charlotte is a globalizing city

The first conclusion is that Charlotte now is not yet a global city, but it is a globalizing city. We may see this evidence from the world-city network map that put Charlotte in the weakest link compared to New York City, Los Angeles, Chicago, and London. The evidence from air cargo data also suggests the same conclusion that Charlotte is not yet a global city. This finding is also consistent with the argument from Graves and Smith (2010) who argue that Charlotte, North Carolina is not a global city. It is, however, a globalizing one

2. Even though Charlotte is not a global city yet, but it has a good chance to be a global city (in 10-20 years)

The data from annual passenger traffic and airport movement suggest this conclusion. The trends at CLT from both measurements show positive trends, and in 20-30 years from now CLT can be the leading airport in terms of passenger traffic and airport movement. Evidence is also found in the number of Fortune 500 headquarters in Charlotte, which is more than it is in Los Angeles, the established global city.

If Charlotte wants to establish its position as a global city, it should focus its economy on service sector, instead of manufacturing sector. This is the strength of Charlotte. We can find this evidence from the established banking industries in Charlotte and the increasing number of passenger traffic at CLT, while the air cargo number is decreasing.

References

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