No matter how diversified Detroit's economy has become, the auto industry is its soul. The same can be said about Pittsburgh and steel or Houston and oil.
But while the Twin Cities has been the heart of certain industries throughout the years — the flour mills at the turn of the 20th century, the computer industry in the 1970s and '80s, even the medical device industry now — its psyche is tied to its wide variety of business headquarters.
"Even as industries rise and fall, you've got these headquarters here that create an ecosystem of smaller businesses and skills," said Louis Johnston, historian and economics professor at College of St. Benedict & St. John's University.
Headquarters draw talent and entrepreneurship to the region, increase civic investments and participation, and bring the kind of economic stability and vitality that land cities and states on those ubiquitous best-of lists and rankings.
"Headquarters are critical to our future," said Mark Addicks, leader of 2023 Partners, an initiative focused on the global future of health technology. "Your best and brightest want to be where the ideas are created; that is typically where the headquarters are."
In 2010, Minnesota had 21 Fortune 500 companies, helped by the growth of Ameriprise, Thrivent, Xcel Energy, C.H. Robinson, Ecolab, Land O'Lakes and Patterson.
This year, Medina-based Polaris Industries Inc. and St. Paul's Securian Financial, a mutual insurance company, both made their debut on the Fortune 500 list.
But with Mosaic Co.'s announcement in May that it is moving the center of its operations from Plymouth to Tampa, Fla. — along with about 150 jobs — the state now claims 18 headquarters on the list.
Mosaic's decision comes amid other recent public-company losses — including Valspar, which was purchased by Cleveland-based Sherwin-Williams, and uniform supplier G&K Services of Minnetonka, now owned by Cincinnati-based Cintas.
Also off the list are Buffalo Wild Wings, which was acquired by Atlanta-based Arby's Restaurant Group Inc. after BDubs' bruising battle with an activist shareholder group last summer. Snowmobile and ATV maker Arctic Cat also moved out of its downtown headquarters after being snapped up by Providence, R.I.-based Textron Inc.
Is this slew of decampments a wake-up call? Or the inevitable churn of maturing businesses?
Yes and yes, said several local business leaders and economists.
While Minnesota's well-diversified corporate environment helps blunt the blow of a Fortune 500 departure, headquarters still matter and each dwindling number can feel like a gut punch to the state's image.
Some civic leaders have stressed the need for more investment and support of startups and technology initiatives to keep the company headquarters culture vibrant.
The reason? Most of the biggest players have grown out of local companies or initiatives. Medtronic started in a north Minneapolis garage. Target started as hometown department store Dayton's.
But the evolution in the Twin Cities also reflects a two-decade decline nationally and locally in the number of public companies as a whole. Publicly traded companies have become increasingly consolidated through mergers and acquisitions; others have moved headquarters to more tax-friendly nations overseas.
"When Medtronic is no longer headquartered here or St. Jude Medical is no longer headquartered here, the big question is [whether] the workforce here is providing new products and services such that it continues to grow," said Shaye Mandle, president and CEO of the Medical Alley Association.
The changes in the local landscape have contributed to why the Star Tribune 100 list of public companies is now the Star Tribune 50.
The key will be finding ways to nurture the state's next major corporate player.
Having headquarters operations creates a "positive feedback loop" for the state, said Johnston, the St. Benedict's economist.
"You have people who learn their trade at one company, then move to another and bring their ideas with them," he said. "And then you get specialized industries that grow up to service them."
Johnston, who is working on a book about the evolution of Minnesota's economy, said he's convinced that the roots of success for Target, Best Buy and C.H. Robinson can be traced to IBM's decline and the fading computer industry led by the now-defunct Control Data Corp. People stayed in the region and took their knowledge into logistics, distribution and retailing.
Meanwhile hundreds of smaller companies, from sign-printing companies to marketing consultants, have since sprung up to support the retail hub.
A similar synergy is underway in the health care industry, where Minnesota's homegrown giants UnitedHealth Group, the Mayo Clinic and Medtronic spawned a generation of rising executives in related fields and a flow of venture capital.
"We see a lot of migration across industries," said Teresa Daly, chief executive of Navigate Forward, a consulting firm that helps about 400 laid-off, high-ranking executives a year land their next jobs.
Financial-services executives can move fairly easily into the health insurance field, Daly said, while those with experience in consumer products — such as General Mills, Cargill, Hormel or Target — are in demand in banking and health care as those industries seek to improve customer service and patient experience.
More than 70 percent of executives who work with Navigate Forward remain in the Twin Cities, Daly said.
"The more headquarters we have here, the more opportunities they have here," she said. "We are able to keep that talent in the marketplace. It's a positive for our community."
While Minnesota is minting more public companies than it has in the previous five years, it's not enough to replace the headquarters companies lost, and there's no guarantee any of them will grow to the size of Target or Pentair.
"It's hard to pick out which is going to be the next giant, because that company is a small or medium-size business that's growing now," said Johnston. "The important thing about today's headquarters is that they're homegrown. We didn't go out and buy them. We nurtured our own."
Three Minnesota-based companies completed IPOs last year, but only Grand Rapids-based ASV Holdings, a maker of skid-steer and compact-track utility loaders, was large enough to make the Star Tribune 50 list.
Three Minnesota companies also completed IPOs so far this year. Again, only one of them — Bloomington-based Ceridian HCM Holdings — would have made this year's Star Tribune 50.
The state's best bet is to develop the next crop of new headquarter companies, but the next breakthrough employer may not look like today's publicly traded firms.
The Medical Alley Association, which represents an amalgam of established and emerging high-tech health industries, is working to prepare the way. The group has teamed with 2023 Partners to produce the first global summit in the Twin Cities this fall to discuss the future of health technology.
Could the building blocks of Minnesota's next Fortune 500 company already be in play?
"We certainly have early stage companies with that potential," said Mandle, who has led the Medical Alley Association for nearly five years. "This is by far the most exciting and vibrant early-stage community I've seen."
