Every time news surfaces that Sprint Corp. may merge with another company, I shudder.
If that happened, it is very likely the Overland Park world headquarters for the telecom company would be absorbed into the headquarters of the larger merging firm. That could mean the end for most of the 6,000 Sprint employees who work at the campus. In addition, Sprint employs lots of local independent contractors, many of whom live in the metropolitan area. The giant does business with untold numbers of businesses, many of which would suffer greatly without the mother lode.
It is possible that Sprint could take over another company, thus increasing the number of employees at its headquarters. However, according to most experts, Sprint is more likely to be the candidate to exit, not take on more debt and more risk in a highly competitive industry.
The impact on Johnson County would be a “significant blow,” according to Doug Davidson, president of the County Economic Research Institute in Johnson County. Frank Lenk, director of research services for the Mid-America Regional Council, said no company even close to the size of Sprint has ever left the Kansas City area. He said such a departure would have a “widespread impact.”
The consequences would be far more severe if Sprint still employed the 14,500 people who worked at the Overland Park campus at the company’s peak. But even though the number of employees there is now less than half that, one must consider the fact that these are almost all high-paying jobs.
The average wage in the metro telecommunications industry is $94,000 a year. That would mean a loss to the local economy of $564 million. Lenk roughly estimates that the total impact, which includes the multiplier effect of also losing contractors and substantial expenditures in the local community, is at least two times the lost payroll. The loss to the metropolitan community could exceed $1 billion.
Lenk said this would affect everything from housing prices to leasing rates.
“How damaging the impact would be would depend on whether the 6,000 employees vanished quickly or over time,” he said. Lenk pointed out that the former Leeds assembly plant in Kansas City, where General Motors manufactured automobiles, once employed 4,500 workers and managers. However, by the time the plant closed in 1988, there were only about 1,600 left.
Because the economy is so much better, Lenk thinks Kansas City would absorb the Sprint loss over time, assuming the local economy continues to expand. The question is: over how much time?
Those would be the macroeconomic realities. But there would also be a huge human toll. A flood of $100,000-a-year executives could overwhelm the Kansas City market. Those kinds of jobs do not grow on trees in this area. Spouses’ jobs could be jolted if relocation is in the picture. Homes of these executives could all come on the market almost at the same time. Prices would plummet, and the oversupply would make it difficult to sell homes, particularly in Johnson County, where most Sprint employees live. Personal impacts, such as anxiety and depression, could follow.
It would be a pretty gloomy scenario should Sprint merge itself away. Unfortunately, under a new Trump administration, with a looser attitude toward antitrust laws, such a merger is far more likely to be approved.